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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1071-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE environment, food and rural affairs committee (rural payments agency sub-committee)
Monday 8 May 2006 MR DAVID FURSDON and PROFESSOR ALLAN BUCKWELL MR CHARLES WREFORD-BROWN, MR JEREMY MOODY and MS ALICE RUSSELL-HARE Evidence heard in Public Questions 125 - 204
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee (Rural Payments Agency Sub-Committee) on Monday 8 May 2006 Members present Mr Michael Jack, in the Chair Mr Dan Rogerson Sir Peter Soulsby David Taylor ________________ Memoranda submitted by Country Land and Business Association
Examination of Witnesses
Witnesses: Mr David Fursdon, President, and Professor Allan Buckwell, Chief Economist and Head of Land Use, Country Land and Business Association, gave evidence. Q125 Chairman: Good afternoon, ladies and gentlemen. Welcome to the second of our evidence sessions on the Rural Payments Agency. At the outset, can I apologise that we are a little thin on the ground on this side of the table. One or two colleagues have had some transport problems in getting here and one or two may have to go at short notice to take part in a debate, but we will do our best to get into our questions as quickly as possible. To that end, may I welcome, on behalf of the Country Land and Business Association, David Fursdon, their President, and Professor Allan Buckwell, their Chief Economist and Head of Land Use, and move straight to a very simple question. Could you sum up, for the benefit of the Committee, who do you think is to blame for the present mess, in terms of the RPA and payments to farmers? Mr Fursdon: I would say that the management of the RPA primarily, and it is difficult for us to know whether that blame would attach also to Defra without knowing more about the command and control mechanisms between Defra and the RPA. Q126 Chairman: Right. Some people have said that part of the problem was the move to the dynamic hybrid model, with the complexities versus the historic model that it brought. What was your reaction when, after all the discussions, as I would see it, where the historic model had been the one that was most talked about, Defra went for the dynamic hybrid? Mr Fursdon: I would say that we had had difficulties within our own Association as to exactly what answer we wanted, and we had had a lot of debate and we had tried to do it as democratically as we could. I would say that, in that it reflected the fact that there would be a regional element to it, we were not dissatisfied with that, but the proposal that we had put forward did take account of some historic element to it, we called it HARC, which was a combination of the two, and so obviously there would have been some of our members that would have been disappointed that there was no historic element to it. I think that would be our view. I think that we were trying, throughout this process, to be sensible and to read the tea-leaves, and I think that it is wrong now, with the benefit of hindsight, to say that everybody thought it was going to be a historic system, that was what everybody was counting on. If I remember correctly, there was really quite a debate, particularly from the environmental groups, who were keen to have an area-based system, for the logical reason that if you were going to be looking after the environment as your quid pro quo then actually looking after all the land made sense, as opposed to looking after part of it. Q127 Chairman: Can I interrupt you and ask you, some people have fingered you, that is the CLA, as being the authors of the complexity, and therefore, by definition, the downfall of the present system. You have made it clear that you had your own version of the payments system, a sort of static hybrid model. Did you have any bilaterals with Defra Ministers, outside the implementation stakeholder meetings on this, to make your case, and why do you think yours is a better system than either a historic system, full stop, or the dynamic hybrid? Mr Fursdon: Certainly, I am happy to answer that question. One of my slight concerns, however, is that I am very happy to look at this, but it does seem to me that by concentrating on this too much we are in danger of actually giving it more importance than perhaps it had; but I understand that. Q128 Chairman: I am just giving you the opportunity to defend yourself from having the finger pointed at you as the authors of the problem? Mr Fursdon: I am very happy to do that and, in fact, it quite amuses me that people suggest that we have such influence that whatever we come up with is the one which immediately is taken up by the Government and introduced; however... Allan, I do not know if you would like to come in; you are somebody who was involved. The question about quite how we got to that, in terms of bilaterals, and so on, I do not remember any particular bilaterals about it. Professor Buckwell: No. First of all, in principle, if we are changing the purpose of the payments system, it is not at all surprising that the basis and the beneficiary group would change. The arguments that the most decoupled payment is an area-based system, a system which is paying for land management ought to pay for all land management, not just bits of it, and ought to pay it at rates of payment that are roughly defensible, so that there are very strong reasons as to why, in the long run, you would move to an area-based system if you have accepted that we have moved away from an agricultural subsidy system, the CLA was well apprised of those arguments and sympathetic to them. The question then becomes the practicalities and speed. That is why we argued that to move immediately to an area-based system, which incidentally no Member State of Europe has done, it is done only in the new Member States where they are not replacing a historic system, would have been hugely painful because of the redistribution effect on livestock particularly. There are such wide discrepancies in the historic payment rates per hectare, particularly for beef and cattle producers, some very high, some very low, that moving to an average would simply destroy those businesses if you did it very rapidly. Therefore, our answer was to at least signal that we have got to move in that direction in the long run by regionalising the arable payments, but for the time being, in order to get a system up and running, to stick to the historic distribution for livestock, and, admittedly, that was, if you like, a political compromise within the CLA. We had no special meetings with Ministers, because we do not get them; we were part of a stakeholder, active debate on this which took place over about a year. It is absolutely untrue to say that the only voices were talking about historic; only the farming voices, the farmers' unions, were arguing about historic only, but the more far-sighted and wider-looking organisations were seeing that there were other arguments that had to be in play. Q129 Chairman: Your alternative model was more about what you thought was best for distributional effects and to get the system up and running, rather than something that was guided by an insight into the organisational complexity of alternative models? Professor Buckwell: The organisational complexity was not a factor in our decision, because we could not know and did not know and still do not know, and we hope that your Committee will bring this information out, what the requirements on IT systems and on management systems were. I have to point out that in Germany, which is implementing a dynamic hybrid over all of the Länder, over 16 or 13 regional schemes, it managed to make 80 per cent of payments by last December. That points the finger very clearly. This is nothing to do with the system of payments chosen, it is to do with the capability and the ambitions to map land and to administer an IT system, and we have got a fraction of the number of applicants that they have. We tried over the weekend to get data on the extra number of applicants that they have had and managed and the extra amount of land. We have not got that, but we will certainly communicate it to the Committee if we can track that down. These are excuses. Your first question was "Who is to blame?" The answer is the management and the IT system that was put in place. This is not a very demanding task, to measure a few fields of 120,000 people and dish out some money within 12 months. It does not sound like something that ought to grind a government department to its knees, and yet apparently it has. Chairman: We would certainly be very interested, if you were able to throw any light on the fact of, seemingly, some of our questioning will elicit later on, Defra "taken by surprise" by the number of applicants over and above their existing volume of recipients, in terms of a new payment scheme. Clearly, some of the issues surrounding the definition of agricultural land would be very interesting to explore, so any information from the German context would be helpful. Q130 David Taylor: You said that you are surprised that people credit you with influence which you do not have, and you have sort of rebutted the suggestion of the TFA, in particular, that you had pressed Defra for a list of potential models which could be used to implement the SPS? Professor Buckwell: We certainly pressed them for that. Q131 David Taylor: Which included hybrid models? Professor Buckwell: Of course. This was a very unusual Regulation. Instead of just defining the end point and how to achieve it, it gave a huge range of choices, and it seems perfectly rational that stakeholders would want to hear from Defra, the Department responsible, what those real options were and what their pros and cons were. Q132 David Taylor: Despite your perceived lack of influence - that is your perception, not mine - in relation to Defra, how did you go about the discussion on hybrid options then; did you suggest that your membership might be positively disposed towards certain of them? Mr Fursdon: I chaired our Executive Committee at what was one of the most difficult Executive Committees I have chaired, where we were trying to decide on policy and we were informed by Allan and others who had been around the country on road-shows, we had done a questionnaire in a magazine, and so on, and we had a good debate about it. It is quite interesting this line of questioning now, which is, to some extent, how much did the choice of system affect what has actually happened. We were working on the assumption that whichever system was chosen the RPA would be able to implement it, and we were never given any indication that the resources would not be available and the management capability would not be made available to implement whatever was suggested. At the time, in whatever way one may look back at it now, whether or not we would actually get it to work was not one of the subjects which were being discussed. We were discussing how we could square the circle of those people that wanted to reflect something for the historic element - Allan has just explained the difficulties on the livestock, and so on - with the fact that we read the tea-leaves on the way in which it was going, the way in which the environmental groups were arguing, the way in which even the Government, in its attitude to the CAP, was going, which is that you are actually going to have to justify what you are doing longer term. It was a combination of those things. Yes, we actually asked and we wanted to know what all the options were, and at the end of the day we came up with our own option, which is the HARC option, which was not the one that was chosen but was one which we put together actually to try to find our own way, as an Association, with the diversity of views within our Association, as to the way forward. Q133 David Taylor: Until deep in the process, it seemed to you that Defra were going to be making a choice between historic and area bases, so it was a surprise, was it, that a hybrid emerged? Should they have consulted specifically on a particular hybrid option, in fact, the one that they chose, do you think? Professor Buckwell: We would have preferred that, and we understand in the final throes the NFU were quite close to that process, they were actually involved in the final stages of the phasing of the dynamic portion and handling regions. I have to say, they did not make a tremendous success of that, because the two regions announced had to be changed into three very rapidly. Q134 David Taylor: There was not widespread consultation on this? Professor Buckwell: No; we were certainly not part of that. Q135 David Taylor: You had not been in negotiation with an important player? Mr Fursdon: We were not party to that. Q136 David Taylor: Should you have been? Mr Fursdon: We would have liked to think we would have been, but we just accepted the fact that we were not invited in to discuss that. Q137 David Taylor: We had evidence from the NFU, I cannot remember, Chairman, whether this was written or oral, and they said that the Regulations would not have allowed for a dynamic hybrid that started with a combination of zero per cent area and 100 per cent historic, which, looking back a little bit, seems likely to have been implemented with more success than the hybrid that we have landed with? Professor Buckwell: Most of the problems that we have run into are not specifically with the new people that are brought into the scheme by choosing a hybrid. Q138 David Taylor: It is not connected with the roots of the problems, and we heard some interesting comments from you earlier and we shall hear some more in a moment or two, it is whether or not you feel, as the NFU did, that the European Commission would not have allowed a combination of zero area and 100 per cent historic in the first year, that they wanted to see some step forward on a hybrid? Professor Buckwell: I have no idea if that is the case or not. Q139 David Taylor: They were quite straightforward and certain about that. Would that have been a simplification, Professor, or do you think that it would have led to fewer problems of the sort we have seen? Professor Buckwell: No, I do not think so. The problems that we have got, we have got a deep-seated problem in registering and mapping land, that is fundamental, and the management systems around that and the fact that it was decided to manage this process on a tasked basis rather than a case-by-case basis, there were decisions of that kind, which condemn the process to disappear into perplexity, which we are still trying to unravel. Given that we were going to be mapping a huge amount of land in a new way, digitising these maps, this was going to run into problems whichever system had been implemented, is our gut feeling, and there is no requirement that because you had chosen this particular hybrid it was guaranteed to fail, because other Member States have shown that is not the case. Q140 David Taylor: Defra and the RPA were quite intransigent on this particular point, that they wanted to have all the area claims in so that could have an aggregate, that was averaged out over the complete area so needed everything to be in before they could pay anything; that was their stance for quite a time, was it not? Professor Buckwell: If you have got an area element at all, you have to map all the land, however small. Q141 David Taylor: Of course. It might have been possible then to put 80 per cent in to have made an interim payment based on what the information so far, maps and aggregations, had been: that would have been possible, surely? Professor Buckwell: I do not understand the scheme you are suggesting. Q142 David Taylor: That you do not need all of the data; if you have got a large sample of the data that is fully mapped and fully analysed, that you can make an interim estimate at least as to what the average might be, to be refined when all the data has been collected and mapped? Professor Buckwell: It sounds as though that would run into the problems, which in a sense we have got now, of validation, where there seem to be very exacting standards, that you are not able to get just rough estimates based on 80 per cent we are not validating. Q143 David Taylor: Eighty per cent, say; I am just picking out a figure? Professor Buckwell: Even on an individual claim, if there is a dispute over two-hundredths of a hectare it is enough to stop validation. The tolerances and the precision thresholds have been set ludicrously high. The fact that is the case is shown by when a new Chief Executive of the RPA comes in, changes several of these tolerances within days and speeds the process, and it just indicates that there is a degree of searching for precision in implementing, and, I suspect, whatever system which Defra imposed on RPA which condemned this process to failure. Q144 David Taylor: What I think I am saying, Mr Fursdon, is that where individual claims had been ratified and validated, it would have been possible to pay interim amounts to them, based on the likely aggregate sums available? Mr Fursdon: I think the answer is, it might well have been, and indeed there might well have been other ways in which interim arrangements could have been made. This is where the actual interaction between the RPA and Defra and what they felt was allowable under European rules seems to have been the problem. Along with the other farming organisations, certainly we suggested, much earlier on, that interim payments could have been made on a number of different bases; but every time we came back to this idea of disallowance and going against the rules. While I understand the point you are making, I suspect that could well have fallen foul of that, because if there had to be a retrospective readjustment there was a panic if the readjustment led to payments needing to be clawed back, that they were not prepared to take that risk. Q145 Chairman: I just want to pick up on something you said in your evidence just a second ago, about belief in what the RPA could do. From where did you get your feedback as to what you think the RPA are capable of doing; did you have any bilateral discussions with the RPA over any aspect of the likely implementation process of the Single Farm Payment? Mr Fursdon: We did not have any bilateral discussions with the RPA. What we said, at almost every meeting that we had - - - Q146 Chairman: Are these the stakeholder meetings? Mr Fursdon: They were the stakeholder meetings, in particular. Q147 Chairman: That implies that there were other meetings? Mr Fursdon: There were other meetings; for example, the then Chief Executive of the RPA came to us, in our London office, with his Head of Operations, and met me and Allan at that; they both came to our CLA Council. Q148 Chairman: When was that? Mr Fursdon: The Council meeting was in early November last year. The meeting in Belgrave Square was, if I remember rightly, two weeks after that. Those were the sorts of meetings we had with them, but the stakeholder meetings had been going on for a while, and you will have heard about those as well. Q149 Chairman: The reason I ask that is, in your supplemental and very helpful evidence, you guide the Committee by saying: "We suggest you might probe more deeply about Defra's role in all this. From the very beginning, Defra have been exceptionally slow in reaching decisions." Then you talk about: "For example, the seemingly simple matter of "who is a farmer"..." Then you go on to list a number of things where Defra have been very slow. If we go back to 2003 when the Regulation was being determined, does this slowness, in your judgment, of Defra's involvement go back as far as that? Mr Fursdon: In my view, it goes back to the worries that we had, and I will ask Allan to amplify, because he was more involved in the stakeholder meetings than I was. I think what we had was a situation where at every opportunity we warned them that there was more work to do out there than they seemed to be acknowledging. We asked whether they had enough resources. They dismissed those sorts of questions. Q150 Chairman: When you say "they," let me be very specific: who are "they," who dismissed it? Mr Fursdon: In the case of Johnston McNeill and Ian Hewitt, those were the two people I was referring to, when I was talking to them and suggesting that they might not have enough resources to get it done, because at that particular time what they were doing was coming to us and saying, essentially, "It's all under control." I chaired the meeting with our Council, with them there, at which almost all the members of our Council were saying, "Well, my maps are completely wrong," and "So are mine," and "I've had this, that and the other wrong." There seemed to be a disconnect between what we were seeing on the ground with the reality of what was happening and the somewhat bland assurances that we were being given that there were sufficient resources to turn it round in time to make the payments on the timetable that we had been promised. That is one answer from my point of view. Professor Buckwell: In a sense, exactly what David just said, we can roll back months to after the announcement in February 2004 as to what the system would be, and it took us all a while to digest what that meant and how it worked. There are three levels of meetings. There are stakeholder meetings, industry fora and for a while there was a contact meeting which was chaired by a Minister. Q151 Chairman: Can I pick you up on a very important point of detail. You said in February 2004 you got the information; "it took us a while to work out what it meant." Does that mean to say that when Defra announced the policy they did not give you any implementation detail? Professor Buckwell: I would not say they did not give us any, but it is a complicated thing and to fully understand how that is going to be implemented and what has to be measured and what the forms are going to look like, this took months to clarify, in fact, we are still clarifying, there are issues which are still unclear, around fields. Q152 Chairman: From whom were you attempting to get these clarifications? Professor Buckwell: In a sense, this is the important point, in my view, and I have to say this, with hindsight. The senior Defra people backed out of this process quite early on last summer and they left it to the RPA operational staff, and in fact below the Hewitt level. The main guy who used to chair the meetings was Bill Duncan, who is now retired. It was at that sort of middle-management level, I do not know how senior he was, reasonably senior, at which the detailed discussions with stakeholders were taking place, and mostly a very productive and constructive atmosphere, until the autumn, when we all sensed it was going badly wrong. Throughout that period, as I am sure the CAAV will tell you later this afternoon, we were warning them constantly, "If there's money for having fields, there'll be a lot more fields out there." Q153 Chairman: How did this backing-out process manifest itself; how did you know they had backed out? Professor Buckwell: They were not there. The meetings initially, there was a contact group chaired by a Minister then, and the stakeholders was chaired by a very senior Defra official, David Hunter, who is now conducting one of the many reviews of the RPA. Q154 Chairman: Sorry; just to wind back the clock. The meetings with stakeholders started with a Minister? Professor Buckwell: It was called a 'contact group'; they kept changing the names. Q155 Chairman: In other words, you started off with all the players round the table, with Larry Whitty in charge? Professor Buckwell: With Andrew Lebrecht, a very senior Defra official, at his side. Q156 Chairman: When did this gathering of the great and the good from Defra first manifest itself? Professor Buckwell: That was going on in the run-up to and after the announcement, is my recollection. Q157 Chairman: This was through 2004? Professor Buckwell: The end of 2003 and into early 2004. Then, in a sense, once the decisions were made, they got more technical, the senior guys did not turn up and, progressively, Hunter's level withdrew. Then there was a Head of an Implementation Unit and then it seems that the Implementation Unit fizzled out to about one person, or two people. Q158 Chairman: Have I understood it correctly that, whilst this gradual, receding presence of Defra, from the senior point of view, was going on, there was a mounting pile of practical questions for which there was no policy answer? Professor Buckwell: The honest truth is that there was a mounting pile of unprocessed applications from May onwards about which there was complete silence, and it was not until the September and October, when we were saying, "The Welsh are giving us processing statistics weekly; why can't we even have the first set of processing statistics?" and we started really pushing for having some concrete information on progress. It was not until, as David has said, we got Johnston McNeill in front of us that finally we started getting processing statistics, mid autumn. It was only then, I suspect, that Defra realised how slow the process was going. Mr Fursdon: Was there not also a period when the stakeholder process was stopped and we had to actually get it going again? Professor Buckwell: Yes. From after the applications in May 2005, the next three or four stakeholders were taken up entirely with the design of the 2006 application form, because they were very keen that we should make good progress with that, which was fine, and then the meetings stopped altogether, and it was not until we agitated - - - Q159 Chairman: Let me ask this question, and I apologise to my colleague here but you have opened up a very interesting line of questioning. As a body, you meet from time to time with Ministers, sometimes over a drink and I do not blame you for doing anything like that. With this mess sort of accumulating underneath, did either of you have one of those conversations where you said to Larry Whitty, or to Lord Bach, or whoever, "What the hell's going on here? Here we are, going to all these meetings you organise, and we're coming away with great misgivings, very worried; have you guys got any idea what's going on?" Mr Fursdon: We got to the stage, we did not have those discussions with Ministers through the summer of 2005, basically until, I suspect - - - Q160 David Taylor: Were they formal meetings, or informal? Mr Fursdon: We did not actually have formal meetings in that period. My predecessor had some meetings. I took over as President of the CLA at the beginning of November, so I was not involved in those meetings. I am not entirely sure what my predecessor may or may not have said in private, but certainly we did not have public meetings which addressed these issues, other than it was one of the issues that we were talking about. When we started to get seriously concerned was, first of all, when we started to get stakeholder meetings up and running again, and then when we had Johnston McNeill come both to our Council and to see us privately we started to get so seriously concerned that we asked whether we could start having some, if you like, resuscitation of the contact group, the actual ministerial meetings. Those ministerial meetings actually, in the recent past, have been happening again, but only really from a stage when they started to accept and acknowledge that they were in trouble. Q161 Chairman: It would be accurate to say that as we neared the mounting pile of problems so the amount of contact between you, as a representative body, and those who were involved at the heart of the process actually diminished? Mr Fursdon: It diminished, in terms of those that were dealing with the stakeholders. We had no greater nor less contact with the Ministers through this period than otherwise would have been the case until it was ratcheted up when they realised they were going to start missing the deadlines and they realised they really were in trouble, which was probably, I cannot remember exactly but I should think, January or February of this year. Q162 David Taylor: Right at the heart of the problems that we have seen over the last few months was, at least to the RPA, the unexpectedly high volume of applications. You acknowledged that the 70,000 IACS have grown to 120,000, but you are relatively unsympathetic, in that you say that they should have been aware of 20,000-ish specialist milk and sheep producers, I think, and that 30,000 is the real growth. Am I paraphrasing your attitude reasonably accurately? Professor Buckwell: That is the essence, yes, absolutely. Even the other group, once you decide, as they did, as an act of policy, in February 2004, to incorporate a land-based approach, a flat rate, a regional average payment approach - - - Q163 David Taylor: That is what has been described to us? Professor Buckwell: Exactly; they have statistics on holdings and these things. There is no reason on earth why they did not know it was tens of thousands and not just one or two hundred, for example. Likewise, it is Defra who, in a sense, does the mapping of this land, of this country, and they know what the area is; the statistics are pretty ropey, but they knew as well as anybody how much land, within orders of magnitude, they were likely to capture. There is no reason whatsoever for them to say they were surprised that there were a lot more applicants and there was a lot more land; it was their policy precisely to do that. Q164 David Taylor: Were you asked by either Defra or the RPA what the volume of new applications might be? Even if you were not asked, why did you not contribute your estimate you have just given? Professor Buckwell: I can show you an e-mail trade - I cannot actually, because they destroy their e-mails - where I was asking them constantly for their estimates of data, but this is treated as state secrets, that are not allowed to share land areas. Q165 Chairman: When did you first start this bombardment of requests for information? Professor Buckwell: In February, or even before the announcement, when all the rumouring was about what sort of system and how much land; this is intensely interesting, this is what we are here for, to understand the application of the system. Q166 Chairman: Which February; was this 2005? Professor Buckwell: It was 2004. Our members need to be informed about the effects of policies and we try to estimate it. Mr Fursdon: One of the things certainly, and I have not been involved in it in quite so much technical detail as Allan has been but the impression that I have had at each stage is that we have been a slight irritation to the process and that really they know best and that our questions are a slight annoyance to them because they know what they are doing. This is certainly the impression that we had throughout the whole process, "We know what we're up to; stop bothering us, stop fussing us with this, we're in control, it's all going fine. Don't keep asking us all these questions," and then you got the impression that every so often there would be a consultation, a rather sort of set-piece consultation with you. That is something I think is a process that has been quite prevalent. Q167 Chairman: Could you be very specific and tell me, Professor Buckwell, to whom you started your flow of questions; who were these aimed at, was it a named official? Professor Buckwell: It would be to named officials in both RPA and Defra. Q168 Chairman: It would be very helpful to us to know whom. I appreciate you have not got the e-mails and that is completely understandable, but it would be very helpful, in terms of providing an audit trail for us, to know who was the recipient of your requests for information? Professor Buckwell: The Economics Department of Defra, because they are the people who gather the economics and statistics on the sector, and as soon as we start talking about regional payments, we would like to estimate how big they might be, which needs an estimate of the area, so there is a discussion and e-mail traffic. Q169 David Taylor: Were we to ask Defra and RPA for the audit trail, as the Chairman has described it, of correspondence with yourselves, you would be very relaxed and supportive about that? Professor Buckwell: Yes. Q170 David Taylor: To press on briefly, to finish off on volume, Chairman, before returning the baton to you, I asserted, rather than actually justified, that the delays were due substantially to an increase in volume of applications over and above that which they might have had in any plan which they created. Do you agree that is a reasonable thing for me to have said? Professor Buckwell: Of course; and it makes sense, if you have more customers it is going to take longer, but all I would ask is, I would like to see an analysis of where the real difficulties have been. In a sense, this is what your inquiry, I hope, is going to get to the bottom of, but I think the decision to digitise the mapping and to include environmental features and to change the environmental schemes, and all at the same time, all the demands on the Rural Land Register, was a task, given their IT system and the way it is managed, which was simply too big for those resources to cope with. In other words, the fact that it has gone wrong and has taken much longer than anybody thought is not just because of the additional number of customers. Q171 David Taylor: You said something interesting, amongst a lot of things which were interesting, particularly interesting, a few moments ago, when you said that when you make more money available for fields more fields will appear. Do you stick by that? Professor Buckwell: Of course. That is the nature of policy systems and incentive systems. Q172 David Taylor: The point I would make is how closely is that tied to there being a very low, de minimis measurement, of 0.3 of a hectare, or something like that; had that been raised? Professor Buckwell: This is a European Regulation and it has to cope with the pocket handkerchief size plots in farms in other Member States, and so you cannot have different minimal requirements for different Member States, apparently. Q173 David Taylor: Because there will be a larger number of beneficiaries of CAP funds, has that had any corresponding change in your own membership; have you had people pressure you? Mr Fursdon: No; it has not really. In terms of our membership, our membership has been roughly the same for the last few years, it has not increased or decreased really, it has stayed much the same. Q174 David Taylor: The mix of members, the land-holdings they have, this sort of thing has not been a factor? Mr Fursdon: We have not been able to find any trend that would link any changes in our membership numbers with what has gone on here. The point that you raise, yes, there are more people and therefore that takes more time. My point is that actually if they have a task, which is they have decided to go down a certain route which involves mapping, and so on, they have got that task, what resources have they got in order to achieve that task, whether human, IT or anything else, then the third question is how long have they got to do it, and we knew when they were trying to get these payments out, and it is a combination of the interaction of those three things. Yes, more claims will mean the task is greater, but our contention is that should have been obvious to a Department which is tasked with dealing with these things and dealing with payments and dealing with the environment and mapping, and all the rest of it. Having got that, so two of the three variables were fixed, what the task should have been and when it had to be done by, therefore the one that had to be fixed was the resources one and how the resources were going to help them achieve that. Q175 David Taylor: There were lots of "they" in there; they, Defra, they, the RPA, they, Ministers? Mr Fursdon: They, the RPA, who designed the system, to follow what they, Defra, had laid down as the task that they wanted achieved. Q176 Chairman: Just on a point of detail, there was the overarching Regulation to introduce the decoupled payments scheme and then there were some implementing Regulations. In terms of the kind of detail which Mr Taylor has just been exploring, for example, your postage stamp, pocket handkerchief pieces of land, was that agreed within the discussions on the implementing Regulation? Professor Buckwell: That was in the Regulation. Chairman: That was in the Regulation. The reason I ask that question is that one of our witnesses put it to us that, had Defra decided early enough that it was going to go down the dynamic hybrid route, in some way it could have re-engaged, and I use the word advisedly, in the process of discussion about the Regulation to have influenced it in some way, as my colleague said. In other words, to put in a de minimis larger than the present. If I have understood you correctly, Professor Buckwell, they could have engaged in that, but perhaps they did not? Professor Buckwell: I am not completely certain of this. I thought it was in the Regulation. Most of these Regulations, in a sense, flow on from the predecessor Regulations and it has always been the case that the threshold for getting agricultural subsidies was very small, I assume the logic is because you have got a lot of very small holdings in other Member States and who would not like half of their farms to be excluded by having a much higher threshold. Mr Fursdon: Certainly under the old IACS system you were doing it to two decimal places in hectares, on the old IACS forms. Professor Buckwell: These are excuses; ex-post rationalisations of the fact that we have got a badly-managed system, and there is no reason on earth why 120,000 applications cannot be processed in a matter of a few months. It is not rocket science. Q177 David Taylor: We have not necessarily bought this rationale, we are just letting you have a say. Professor Buckwell: Yes, I understand. Q178 Chairman: Our task, Professor Buckwell, is literally to sort the wheat from the chaff and so we have to review with each of our witnesses what other people have said to sort out the difference between excuse, conjecture, rumour and hard fact. I am delighted that you are rebutting that and you have come back to the central point that you made at the beginning. In your written evidence, and just following on from the line of inquiry on this volume, you comment, and I quote: "We understand that the system" meaning the IT system "simply could not cope with the number of operators who required to be online simultaneously and thus it continually crashed leaving operatives drumming their fingers." This feedback on the volume effect of the IT system, is that anecdotal from your members, or did you have any feedback from somebody on the inside of the RPA? Professor Buckwell: That particular and the drumming of the fingers literally came from a member who managed to get inside Reading and watch them as they processed. You have heard these stories, the fields are on, they are off, they are on, they are somebody else's fields, on; it is an unstable system that does not do what it says on the tin it ought to do. This member got in there and he watched this and he watched the system go down and literally everybody sitting there, just waiting, they cannot do anything, and you can imagine the frustration of the operators, who are professional people, trying to cope with, essentially, a lousy IT system. Mr Fursdon: I have to say that in our discussions with Johnston McNeill and Ian Hewitt there was an acknowledgement that the system crashed from time to time. I cannot remember whether it was a discussion in the margins of our invitation to them to attend our Council, or whether it was in the bilateral meeting we had with them in Belgrave Square, but at one or other of those meetings there was an acknowledgement of the IT crashing, which seems to bear out what Allan was saying came from this member about it. Q179 Chairman: Just before we move from this area, you have given us a picture to date of growing unease, going back to 2004, and you have also indicated that your main points of contact, over that period, about the policy implementation were with various officials from Defra, subsequently with the RPA. During that period, between the agreement of the Regulation in 2004 and the wheel falling off at the end of 2005, did you formally communicate your organisation's concerns to Ministers by means of correspondence? Mr Fursdon: I am not sure that we did to Ministers by correspondence. We certainly did to the RPA Chief Executive by correspondence, by correspondence on several occasions, concluding with Peter Kendall of the NFU and myself writing a joint open letter to him about the shambles. Q180 David Taylor: This was in conventional ways with copies that you have retained for your records? Mr Fursdon: Yes, we would have copies on the file. I am not aware that we actually mentioned it in written correspondence with Ministers, although when I took over from Mark Hudson the two of us went together to see Margaret Beckett and discussed various things, amongst which was the RPA, which we expressed as one of the items put forward. Q181 Chairman: Let me pin you down again on a point of detail. It would be very helpful to know when you went to that meeting, because officials will have taken a minute, no doubt, about that and it would be very interesting to find out, because you may not remember yourself, covering a large canvas of issues, exactly what the Secretary of State said at that time, but it would be very helpful for us to know when you went to see her? Mr Fursdon: What I know is that at that particular meeting she was much delayed and so we were waiting; one or two of her other Ministers were there and she came in. What I cannot remember, without the notes and I do not know that I have got enough detailed notes, was quite which bit was covered with Ministers while we were waiting for her and which was covered with her when she arrived. I can look in the diary, and if you would like a date certainly I can give you a date. Q182 Chairman: That would be helpful. Professor Buckwell: Can I just clarify, that the real concerns about the pace of processing did not well up, so to speak, until autumn, October/November; that was when we realised that it was not going well and that was when all the arguments about partial payments started. Prior to that, the anxieties were about delays in announcing specific implementation details, so if we have given the impression that there was a lot of niggling long before autumn last year, it was about the fact that we had not announced what a farmer is for transferring entitlements. I have got a list of about 30 of these sorts of issues that were running for months where we could not get an answer. Q183 Chairman: It would be very helpful to have that list. The reason we are asking all these questions, and you put your finger on it, which was why I started inquiring about your understanding of the IT system, if you are going to get an IT system to do something you have got to tell it what to do, and resolving the questions that you have just described is key to it. Being able to let IT people then build that into the software requires decision-makers to have decided, and I am anxious to know who knew what, where and when. If we are to get to the bottom of how this occurred, we have got to know when the decisions were made and how long the IT people then had to write it into the software and the operating procedures and to make it work. That is why we are asking these questions. It would be also very helpful, in that context, if you were willing to share with us your correspondence with Johnston McNeill and any others that you think are relevant, so that we may see how they were reassuring you against a background of the facts that are now emerging? Mr Fursdon: I am happy to do that. Q184 Chairman: Thank you. I just want to move on very briefly to something you touched upon earlier, which was inquiring with your German counterparts. Are you still awaiting some feedback from them, because one of the questions that we would like an answer to is, if they have adopted what appears to be a not dissimilar dynamic hybrid model, they have managed to pay, as you said in your evidence, 80 per cent of the money by the end of last year? I gather, from conversation with some colleagues in the Bundestag that we had here last week, that it has not all gone absolutely perfectly, but at least their farmers have got their 80 per cent, whereas a large number of ours are still waiting. Have you had any feedback as to how they have done it and we have not? Professor Buckwell: The short answer: no, but certainly we will pursue that and we will share it when we get it. Q185 Chairman: That will be extremely helpful, because we are always interested to know how other people manage to do it when we hiccup. Would that also incorporate some commentary on the mapping system; what I am not clear about, in the case of the Germans, did they use the same digital approach that we have had to follow? I would like just to ask you, almost en passant but nonetheless very important, because a lot of what you have been talking about is about the flow of information from people who provide answers, systems, solutions to the needs of Defra, to their Ministers, and in the Natural Environment and Rural Communities Bill Defra takes powers to itself to be able to subcontract to other agencies some of its duties, and I wonder if by any chance this debacle over the Rural Payments Agency has caused you to reflect upon the power that Defra now has? Mr Fursdon: From my point of view, it has not specifically, because I think until you actually see what is happening and who is doing what you do not focus on it, necessarily. I made a comment, which was a very general comment, just now, which is that so-called partners, or so-called stakeholders, are ostensibly part of the process but in reality are not. They are seen as a possible contributor at some stage but ultimately the inner sanctum then decides. I think that how that plays out with other organisations which may be delegated the powers to deal with these will depend on how they deal with the organisations that they come into contact with. I would sincerely hope that they would not deal with it in quite such a sort of 'them and us' way, as we have seen through this. Professor Buckwell: I think it is an extremely good question, because this is the issue of the Government's approach to divorced strategy and policy from implementation. There are clear, potential arguments for it, which is specialisation of the delivery agencies and efficiency, but when it goes wrong it goes spectacularly wrong. Of course, if the policy is not well designed, because the people making the policy are so out of touch with the delivery and therefore with the customers and the people on the ground, then you run into problems. For example, the Regulation that we are working from does not even appear to have any concept of the way land is managed in the UK and the short-term crop licensing and grazing agreements which are absolutely common, which it appears that nobody, when this Regulation was being designed, said or had any effect in saying "We'd better take into account the way the British land tenure works." You slightly suspect that was because they did not know, rather than that they tried and failed to get this into the Regulation. They talk about six-year tenure periods, which we do not have, so that when there is a lack of understanding of the way farming operates on the ground amongst those who are charged with making the policy then it becomes pretty damned difficult to implement. Mr Fursdon: We could have told them; that is what I am trying to say. Q186 Chairman: Who are "they", in this case? Mr Fursdon: In this case, it could be Defra, who are charged with looking at systems of land tenure and how you might implement these Regulations. Rather than to come rather late in the day and say, "Oops; how do we get out of this?" if they said, "Can we just check that we've got the land tenure systems right?" then that would be an easier thing to do, and I suspect that CAAV will have something to say on that. Q187 Chairman: In summary, you are saying that Defra does not really understand, in the context of the Single Farm Payment scheme, the way in which land is operated in a number of different scenarios that you have described in the United Kingdom? Professor Buckwell: I would have thought it was not unreasonable that, on the day that the Regulation comes out, which mentions a new phrase in tenure arrangements, land at the disposal of a farmer for ten months, Defra would have an answer to how that fits in. Mr Fursdon: Farm scheme arrangements, farm business tenancies, whatever else there may be. Professor Buckwell: Last year, it took ten months to clarify that, of constant badgering by us as to how those systems were going to operate within this Regulation; but, of course, poor old RPA is just waiting for the answer. Mr Fursdon: That is not to say that there are not Defra lawyers that might have some of this at their disposal, maybe not all of it, but what tends to happen is that they are not connected up to the people who are actually dealing with the implementation of the Regulations as they come in, and it is not spotted quickly enough, so that actually when the design stage is coming through people have not necessarily got their heads round the implications for this country of some of these Regulations. Q188 Chairman: Gentlemen, thank you very much indeed. I wish we had an infinite amount of time. I am sure there is even more information to elicit. If, as a result of the line of questioning that you have been kind enough to assist us with this afternoon, other points occur, other than those which you have kindly committed yourself to supplying some further information on, the Committee would be delighted to hear from you. We are disciplining ourselves that when it comes to sorting out this mess we do not have to rush to get our answers out at the sacrifice of thoroughness, in trying to get to the bottom of how this problem occurred. To pick up, Mr Fursdon, on a point you made on a programme that you and I appeared on, we certainly also do not want to do anything to slow up the payment to farmers, and I hope you will accept that we have designed our inquiry to that objective? Mr Fursdon: I noted that you had done that, so thank you very much, it is much appreciated. Chairman: Thank you both very much indeed. Memoranda submitted by Central Association of Agricultural Valuers Examination of Witnesses
Witnesses: Mr Charles Wreford-Brown, President, Mr Jeremy Moody, Secretary and Adviser, and Miss Alice Russell-Hare, Professional Assistant to the Secretary, Central Association of Agricultural Valuers, gave evidence. Q189 Chairman: We now move on in our quest for the truth, as they say. The Committee is joined by the Central Association of Agricultural Valuers, Charles Wreford-Brown, their President, Jeremy Moody, their Secretary and Adviser, and Alice Russell-Hare, the Professional Assistant to the Secretary. May I say at the outset how grateful the Committee is for the very considerable amount of additional material which the CAAV has very helpfully submitted. As you might have noticed, with the line of questioning that we have just had, the diary of events is of particular value in trying to put into context some of the information that we have just heard and also the notes from the stakeholder meetings. We recognise that these are not a verbatim report but they do give some very important insights into some of the processes that are involved, and the Committee is also very grateful that you are happy that this information be entered as evidence into our inquiry, and for that we are very grateful. Starting with a very simple question to all of our witnesses, just to get them revved up and in the mood for answering the more detailed questions, who do you think is to blame for the mess with the RPA and the Single Farm Payment scheme? Mr Moody: You start with the decision to choose a hybrid system, and it probably matters not which hybrid system but any hybrid system. Having taken an option which was self-evidently the most difficult of those available, it then falls to those that have to deliver it to will the means to deliver it, and that seems to be the point where things have fallen apart, that a challenging hybrid was put in place without necessarily the attempt to deliver it or to understand the world in which it had to be delivered. You heard previously from the CLA how they sought to represent it; we too sought, as you will see from some of the papers that are before you, to represent the kinds of stimuli and process that were set in place by a dynamic hybrid, and it is dynamic not only in its own system but that it is dynamic in creating stimuli for people to react to it. It is inherent in the area option and anything that relies on the area option that it turned on the 2005 facts of land occupation. It was desperately important that whatever decision was taken was taken as early as possible, and this particular time it was taken two or three months later than the industry would have wanted, but, as it was, it gave 15 months' notice to everybody of the rules by which they could maximise their positions. It created its own dynamic and that would seem not to have been appreciated. As was discussed, I think, earlier this afternoon, Defra did clearly lay out, fairly early in this process, for their own purposes, quite detailed management programmes and various sorts of management jargon pertaining to this, and so forth, but for the delivery of consultations, decisions, SIs, and so forth, by no means, for all sorts of reasons, did they hold to that. That process then seemed to stall. As was said earlier on, there was effectively a handing over of discussions after the May 15 forms went in, in 2005. All our discussions effectively then, the focus of them moved, as with the CLA's, from Defra to the RPA, and that is the point where the IT systems, or the management of it, or whatever, have got us to where we are now. Q190 Chairman: If we go back in time to when the discussions first started, do you have any feedback as to, I suppose, how Britain conducted the negotiations? I think what I am getting at is that some of the problems have been referred to in the context of "us not realising what it was we had agreed to," in other words, the volume argument. If one winds back the clock, when Ministers were sitting there in the Council of Ministers and they were discussing the new Single Farm Payment arrangements, most of the Regulations that I have ever been involved in usually sketch out in general terms what the territory is and what you can do and what you are allowed to do. Did you get the impression then that Britain understood what it was it was signing up to? Mr Moody: I think, very clearly, the British negotiators were among the more competent of those negotiating the process. We put in an enormous amount of effort with the active policy officials on this one, hammering out definitions. Our suspicion was that only the Swedish Government was making a similar level of effort. There is a story that somewhere round about the beginning of June 2003 the Belgians sent a junior Foreign Minister who thought this was only a minor review and was sharply disabused as to where things had got to at that point. I think the level of input from British policy officials, certainly, and then, in those June 2003 negotiations, from Ministers was very strong, was competent and delivered a large number of national goals. The problem was then we changed our mind about what we wanted from it. There had been no internal discussion, no thought at all that as the area option began to emerge in the very late stages of the negotiations we would ever take it. It was regarded as a bit of an amusement, faintly entertaining, that it was there. We understood the reasons why the Germans had some desire to have it, because of competitive issues vis-ā-vis Poland, and so forth, but it was seen as a bit of an oddity. The luxury of debate opened up when round about late May or early June 2003, in the closing stages of the negotiations, because of the lack of awareness among many of the other Member States, the implementation date for this moved from what was clearly very demanding but I think the date that people wanted, which was 2004. All of a sudden an extra 12 months was given and, to an extent, that took the tightness out of a lot of the debate. We were on a very tight run to deliver for January 2004, a very tight run indeed, in the light of hindsight. Suddenly having space opened up, opportunities for people to talk then about other options and ways of doing it. We moved from a Regulation where if you wanted to understand it from the farmer point of view you started at Article 33, halfway through the Regulation, to the point where, so we started on this back to front, then we turned it inside-out to make it all run from Article 59, and some minor paragraphs of Article 59, in trying to apply the regional area option, and then do so with the hybrid model. In practice, the British Government very competently delivered something that did not answer the questions it subsequently chose to ask. Q191 Chairman: Would you have thought that, in the briefing of Ministers, and I am trying to put this question to you as neutrally as I can, United Kingdom Ministers would have been briefed by those officials who had worked with other officials within the Council of Ministers, that the Minister sitting down to agree the Regulation would have understood what it was they were agreeing to? Mr Moody: I think the Minister would have understood that she was agreeing to a historic option. That was the mainstream, that was the central architecture of the Regulation. It was the one which it was presumed that Britain would follow, and that if there was a byway, with interesting little arguments about how what were then called the 'negative list' crops, the fruit, vegetables and potatoes, were to be handled, this was a little bit of continental arcana that did not really trouble us very much, save insofar as it affected coalition-building within the Council of Ministers. The interest in areas blew up in late summer, and by then we had gone into hybrid three. Within England, not the UK at all, it blew up in late summer 2003, hybrids emerged as a feature of the discussion once the problems of pure area were identified, in mid October, running through November and on. The negotiations on the political agreement were all closed by 26 June. Q192 Chairman: What do you think it was that was the catalyst to this sudden interest in area payments and the then need to introduce them with a dynamic hybrid model? Was it the campaign that was run by various elements within the National Farmers' Union to bring horticultural land into payment for the first time, or was it something else? Mr Moody: I think, probably, if you are looking for an organised campaign, it most probably came from the environmental bodies, which were anxious to draw in all land for cross-compliance. Somehow they saw the theory of what now I suppose you would call double decoupling, not only decoupling from production, which is the core, even fundamental, economic reform that comes with the Mid-Term Review, but also that if you decoupled people's future subsidies from past activities that was somehow even more virtuous, though it delivers the same economic effect, that production decisions remain driven by the market rather than by subsidy. That seemed like a bridge too far from where we sat at the time, but they seemed keen to run it. They seemed frustrated, in discussions, with our emphasis on looking at the practicalities of operation, the practicalities of its effects on business. I think there was concern from certain arable landlords, who were used to a land-based system for arable aid. There was always this tension running back into the autumn of 2002, when after the Commission published its Reflections papers as to whether it was to be a land-based or a claimant-based system, and effectively livestock had been claimant-based, arable had been land-based and so there was a tension whichever way you jumped. They were concerned, though I think actually wrongly, that moving to a claimant-based system could prejudice their economic position. You had those two angles. The particular angle of the horticulturalists was coming in as a little bit of a sideshow, I think, at that point, but I think it complicated matters within the NFU, in terms of the clarity with which only ultimately they were able to put their position. What seemed as much to have struck Ministers, and I think, if you look at Lord Whitty's Oxford Farming Conference speech but also our notes on the meeting we had with him on 13 November, were two things. You could see a world in which obviously entitlements were going to move between farmers, and I think he quoted the Hungarian Minister as saying, "I can see why I might have so many entitlements because I had 20 cows, but why after a period of transfers should I have an entitlement based on the fact that you had 20 cows?" I think that was part of the debate and he was almost quixotically anxious about what would be the right decision for five years' time. Clearly, he went through a process of agonising, one of the reasons why I think the decision took so long to arrive at, and ultimately he chose perhaps the purity of theory over the practicality of delivery. Q193 Chairman: It is not often that ministers have such sort of blinding flashes of inspiration. It is usually that officials and/or lobbyists come and suggest these things and they are digested in the form of submissions to ministers and then ministers read them and think, "Well, that might not be a bad idea." Have you got any idea how this sort of sudden interest in this intense detail, the legacy five years hence, got through to Lord Whitty? Mr Moody: That is why I explained it; I think, starting with various interests and then reached Ministers as they began to focus on the issues. Q194 Chairman: The ability to respond to such lines of argument, fortuitously, from Defra's point of view, had already been agreed. The reason I am asking this question is, Ministers have said they were taken by surprise by the volume of applications. Is it because they alighted upon a way of satisfying a line of argument that you have just put to me and, in actual fact, when they alighted upon that bit, which you said earlier on was something continental and not of great interest to us, certainly they said, "Well, it now is of great interest to us," but, in alighting upon that, almost by definition, they had not worked out what the consequences would be for its adoption in the United Kingdom at the time when the Regulation was agreed in the Council of Ministers? Mr Moody: I think, if we are looking for rational policy-making, we would assume that they accepted the consequences of the decision they adopted. How far they understood the dynamics of that, how they actually understood the flexibility of the British farming industry and landowners, Allan Buckwell said their data can be a little ropey, we would subscribe to that view, and how far they actually understood these issues, which our members do because we are handling it day to day, in practice, advising all parties, and so forth, I think is a perfectly open matter of discussion, but in taking that decision they accepted those consequences and we had done what we could to lay those consequences before them. Q195 Chairman: You backed the historic model, as an organisation, going back to this point about visiting yesterday's decision on the future: why did you back it? Mr Moody: We backed it for a number of reasons. The point that a number of people since have requoted from us, which is that if you offer to pay for area you will get area; do not be surprised about the amount of area that you do not know about in England which will materialise. We backed it because we perceived, just as Allan Buckwell outlined earlier this afternoon, the enormous injustices that would flow from the radical redistribution of support overnight, which was what an area system would have meant. Bear in mind that when we started this the hybrid system was not on the table. Bear in mind also that arguing over the hybrid system was rather like wrestling with a bar of soap; it started in one place and by the time you got an answer on that it was somewhere else in the bath. It was peculiarly an elusive concept, and one quite difficult to deal with, but inherently it included within it substantial operational issues that by bringing more land into play, within the already refined definition of agricultural land, we drew attention then to the extent to which this would simply distort decisions over land occupation. Q196 Chairman: Can I just pick up on a point, when you said the redefinition of agricultural land, the redefinition from what? Mr Moody: The Regulation as a fundamental part of 1782/2003, that being a farmer is defined as being one of two things and they can be mutually exclusive. He can be someone who grows, rears, breeds agricultural produce, so the traditional farmer; or, and it is absolutely, in Article 2, an "or", he is somebody who keeps land in good agricultural, environmental condition. That decision, at that point, in the June 26, 2003, political agreement, as then enshrined in the September Regulation, set the stage. That liberty is there in Wales and Scotland but, because they have worked on a historic basis for allocating entitlements, those definitions are less tested, less pressured in practice. In England, we gave the issue full rein, because we chose an area option based on the facts that were then 15 months in the future. Q197 Chairman: Would I be right in saying that if the Ministers' briefing, when they finally came to seek political agreement in the Council, had not said "The Ministers should be aware that agreeing the keeping of the land in good agricultural order will potentially admit X thousand hectares into possible payment which heretofore had not qualified under the old system," that might have been a missing ingredient? Mr Moody: It would have been tangential though only with the historic option, because the historic option said, "What was the area used to support claims in 2000/2002?" That was a fixed, defined issue, based on people's forage area and arable area. Q198 Chairman: Only if you keep it with the express intention that the second bit was not going to be applicable? Mr Moody: Yes, which I think was the British position. Remembering back into discussions in that period as the area option emerged, it was seen as something conceded to suit German circumstances, just as there are little appendices to suit Portugal over Madeira and the Azores. Q199 Chairman: Given what then has transpired, was there a point when Defra could have postponed the introduction in some way to have allowed more time to get the administration in better order, to get it right, however you describe it, for what was now a more complicated arrangement than perhaps they had been preparing for? Mr Moody: There are legal options, of course, and the French have exercised theirs, in particular, to delay, and I think Italy has on the milk side of the reform; there are legal options there. Firstly, the British Government was a very firm supporter of reform, and therefore wished to proceed with it as a flagship, so in her July 2003 announcements, the first statement to the House after the June 26 agreement, Mrs Beckett made it clear that the UK as a whole would move for reform in 2005, take it up early, before, of course, any of the discussion on area had started. Quite what manoeuvring room there was then to turn round and change the decision I am unclear, but from the industry's point of view I think it needs to be understood that this had been an exhaustingly long game. This is a reform with one of the longest time-frames I suspect that anybody can think of. Even if you take the mainstream architecture, people getting their first payments in 2006, under whichever model you take, would be doing so in part on what they claimed in 2000. The reference year period stopped at the end of 2002. Some people will have been assessed on what they had been paid in 1997/1999, some people will be assessed on what they had been paid in 2004, but if you look at the mainstream farmers the clock stopped for them, as regards their history, at the end of 2002. The land market froze at the beginning of 2003, and lettings froze, and so forth, because of people's uncertainty about the position. They went through 2003, the additional year of 2004, which was an uncovenanted extension; they were actually desperate to be able to get on and move on with their lives. Postponing this process further would actually have been damaging to the industry, its flexibility, its certainty, its confidence in Government, and so on and so forth. The decision had been taken and actually the industry needed to move on. Q200 Mr Rogerson: Once the decision had been taken about the system, whatever its complexity, and the RPA had to deliver it, and also given the other schemes that the RPA was having to come to terms with as well, do you think it was being asked to do just too much? Mr Moody: Hindsight certainly says so. We put out a press release on our October 2003 representation, which described this as a reform too far; that was in terms of the area basis. I think we would then subscribe to the view, if you look back at what civil servants were saying, I noted in capitals at the time, from David Hunter, 17 October, simply saying at that point "Time is against us. More expensive is to blend history and area," and I thought that significant enough to capitalise in my Day Book at the time, sitting in on that meeting. This was the first time that we had undertaken a reform that affected everybody, every acre of land, potentially, within the United Kingdom. The reforms that, of course, naturally, took two years for milk quotas to bed down in 1984, they affected 30,000 players. The more comprehensive MacSharry reforms had their store of agony and pain back in 1992 and 1993 and some appeals ran beyond that. We were trying to do this to absolutely everybody, whether they had ever been in a subsidy system or not, whether they ever wanted to know the authorities. We were trying to do something fairly fundamental. Q201 Mr Rogerson: The later decision for a change at the top of the RPA sort of implies that, from the Ministers' point of view, they felt that the resources had been there to get the job done and it had just not been managed very effectively within the RPA; that would seem the conclusion to draw. Would it be your feel, based on what you have just said, that actually, what they were being asked to do, it would be very difficult for any organisation to have delivered it, given the resources they had at their disposal? Mr Moody: It is very difficult for us to comment on the resource questions, it is very difficult for us to comment on the interplay between the RPA and Defra and who said what to whom. I think there is a bit of a political tendency. Because we would like to record our appreciation of the work of many individuals within the RPA; in a sense, in a conversation the other day, we have reached a position where the whole has been less than the sum of the parts, at this end, that there has been a lot of goodwill, a lot of endeavour, a lot of people have worked very hard and just watched the thing disintegrate around them. We cannot really comment on the level of resources. They were given something that was very challenging. Given that there was the political will to take what, in policy terms, or rhetorical terms, or whatever, felt like a nice, wonderful statement to make to the universe, at that point then somebody needed to sit down and put in place the means to deliver it competently. Q202 Chairman: Why do you think that Johnston McNeill kept telling everybody it was all going to be alright on the night? Mr Moody: He was not alone. Allan Buckwell again has commented on the stakeholder meetings. This is one of the frustrating things, in trying to get to grips with this, that we went through certainly October, November, December, January, and on, and they were assuring us, repeatedly, that the contingency was slowly being used up but that they were delivering it. We asked, everybody asked, critical questions, all the understandable questions that we asked. It is interesting, in terms of the reception of those, the pressure boiled up periodically to look at interim payments and, on the whole, the stance taken was that we were being assured by the RPA that we were near enough to getting the process delivered that we would frustrate full payments by going down the road of partial payments. We took, because we had to take, I suppose, their assurances on that sufficiently seriously that we continued to press on to deliver the full bill, rather than step off and do partial payments. Coming back on this, I am aware that there seems to have been a lack of knowledge, of those senior within the RPA, of what their own system was doing, where it was going, how far they had got, what the statistics they were producing meant. They believed that all was for the best. I am conscious for example that I think we took a very serious knock to our confidence in the RPA once the National Reserve Awards came out. They started coming out in early to mid January, and apparently bizarre figures were coming out, with no explanation, so even if they were right, for some reason, you could not be sure they were right, and many of them looked wrong and then they carried on dribbling out. They could not explain it to us. Alice particularly but also I had a number of conversations with them, in which they would go away and come back and try to tell you what their computer people had told them they thought they had understood that it was doing, but there were different explanations at different times on apparently similar issues. As we moved on, looking at Lord Bach's announcement of 30 or 31 January in the wake of your Report, pressing on, and, for the first of our briefing conferences this year, because we had been actively briefing members, at this year's conference we had about 700 people through, I wrote a number of papers, one of which was just a statement of where I think we are, for members, and I copied it with all the papers to the RPA staff, because there were a lot of technical matters in it I wanted their technical view on. At that point, picking up the position, I took a view, which I thought was, what we had been told was, sticking my neck out, to an extent, that it may be that only 50 per cent of claimants would be fully validated at that point, in mid February. That I wrote on 1 or 2 February. On my way to the conference, on February 9, somebody senior within the RPA rang me up to admonish me, saying that it was outrageous that I should suggest that it was half the claimants awards would be wrong. It has turned out that actually the figure is 80,000 out of 120,000, and many of those that were fully validated were and are still wrong, so actually something like three-quarters were wrong. That gap in knowledge, which led somebody very confidently to request that when presenting my paper I also record their alternative view of their facts and what spilled out of their computer when finally it was forced to press buttons, I think is moderately telling. Q203 Chairman: What went wrong with the mapping system? Mr Moody: Thinking about it very hard, I suspect that the problems in the mapping system were there from the beginning but emerged only as it came under pressure. It may be, and this is the problem, I am now talking about somebody else's systems, that it goes back even to 1992/3 and the introduction of the MacSharry reforms. It was fundamental to that, for arable and forage claims, that there be a land register, and that was agreed and put through in Brussels on the basis that continental countries all have full cadastral registers. I know this, from dealing with continental properties, the local authority will hold a full, official map of who you are and what land you have got and you go along and change it. We have no tradition of that in this country and we made it up more or less overnight, in order to satisfy the 1993 first IACS forms, and then progressively it developed and evolved. They have since discovered that it was supposed to have included all agricultural land, but operationally it only included land that was recorded as eligible for arable aid and that which had been declared for forage area over the years. They believed they had a very good Rural Land Register system. Indeed, I understand that they had been commending it to others in Europe. It appears to have come under pressure at the point at which it needed to move from being, essentially, a static system to absorbing much new land, and that came first with the Dairy Premium system in 2004; a lot of mapping had to be done for that. There were something like 6,000 specialist dairy farmers who had not otherwise made area-based claims on the system, because effectively they were just dairy farmers, a few marginal beef claims. The difficulty the RLR had in handling that began to surface in the very late summer, early autumn, as maps were coming back uncorrected, information garbled, and so forth. At that point, we were clearly in the throes of the growing pressure ahead of both the Single Payment Scheme, fundamentally area-based, merely the value being slightly history-based, and also the prospect of ELS, which many farmers were keen to get into because they saw that as a means of bridging cash flow; both area-based systems. I remember, and it is recorded in the notes of stakeholder meetings, that both Allan Buckwell and I were making comments about how people, who were new possessors of land, were going to get hold of previous occupiers' data, how they were going to have the time to get the forms in. You will see what I think is a very clear and lucid statement from one of our members, Catherine Davies of Lister Haigh in Knaresborough which I think sets out for you a very representative and lucid account of how it spoke to members on the ground. I think it was incapable of digesting the extra parcels that came in and, of course, as it has materialised, a data system of 1.6 million parcels has now got 2.2 million allegedly on it. Within it, it appears to contain substantial issues over how it measures, how it reports. Both Charles and Alice could give you more detailed instances of actual cases, but the number of situations where members will have tried to submit amendments, half a dozen, eight or nine times, very often without any apparent result. When they achieve a result and lose the fields that were never theirs. We had a situation, and just to dramatise it, where it took considerable effort for a member with a client in South Yorkshire to lose the fields in Devon that he had been given in the system. Then there are shadows within it. Alice was dealing with a case recently where, on getting the maps changed, they suddenly looked the way they had three changes ago. Again, this is where it is difficult to look beyond merely the symptoms that we see. We cannot tell you causes, we can merely describe to you symptoms. The system appears to fail and it is throwing up all sorts of things. I was rung by a member two months ago now, who said "What do the letters OE stand for?" Apart from the obvious and flippant answer, I did not know. I went to the RPA and they said "It means 'out of England'," which might be understandable for a farmer down on the Welsh border, somewhere on the Shropshire boundary; this field was in Lincolnshire. It appears that it cannot accept changes, it appears there are fields which it just sits away and moves it by digit and back, forward and back again. There are random changes. The RPA is very, very reluctant to concede that the land register side of the Rural Land Register, the actual record of fields, is in error. I made the remark, I think, in our evidence, that it has been very difficult to hold useful conversations with them on the subject. When I introduce members to senior RPA officials, it is the one subject they want to talk about. The first 20 minutes of any meeting would not be about what it was supposed to be about, it would be, for the last 12 months and more, more than that, nearly 18 months, that they wanted to chew the RPA official's ear about the Rural Land Register. Reactions: be it from world-weary "It's somebody else," to "It's perfectly alright, it's customers and agents who are putting in all this duff data;" a deep unwillingness to recognise that it appears to be flawed. So a long reply, but there is an awful lot of it. Q204 Chairman: I think you have given us a very good flavour of some of the failures. Mr Moody: If you want practical examples of it then we are more than happy to provide them to you. It seemed that it was not necessarily very suitable for a committee format, but if you wanted a discussion elsewhere. Some of our members have taken to sending through consolidated e-mails with all the scans of the last nine submissions so it is all there for an official to look at and process. We discussed, at one point, in one of the stakeholder meetings earlier this spring, a means whereby difficult cases could be escalated. Talking with one of the officials, he said, effectively, "You could take the escalation process to the level of God. If God decided that it should be changed, if the system does not respond there is no point in having it escalated." From the outside, there is something flawed in it. It shows different screens in different centres, that people in the Customer Service Centre do not see what they see in Reading, or in Northallerton. It appears to throw up data; again, Alice was looking at a particular thing. Alice visited the Customer Service Centre and the screen for a farm there, for when somebody was ringing in to talk through their fields, included fields as away from the farm because they were let, but they had been let three years ago, they had come back in hand for the years since but it was still showing that up, for whatever reason. Chairman: Time is going to mean that I have to draw this session to a conclusion, which is sad, but inevitably there are constraints on what we can do. However, in conclusion, I would like you to do one further thing, and that is that, if you were in the position of me being the Minister and you being able to ask me the questions, what would you like us to ask the people in Defra/the Ministers when they came before us? You have got a detailed working knowledge of many of the areas of failure and part of our having representative organisations in at the beginning of our inquiries was to make certain that we could ask the right questions of those who are responsible. In bringing this matter to a conclusion, I wonder if I could ask you to assist us in our further inquiries, because that would be of great help, and again to reiterate my thanks for the excellent evidence that you have given us so far. If you would write to the Committee, we should be very grateful. Thank you very much. |