Letter submitted by Lord Bach, Minister
for Sustainable Farming and Food, Department for Environment,
Food and Rural Affairs (RPA 12)
1. I am writing in response to your letters
on 18 and 30 January, which followed my appearance before the
Committee on 11 January. I am also taking this opportunity to
enclose the supplementary memorandum that the clerk of the Committee
requested in his separate letters of 18 January to Defra and the
RPA.
2. First, in respect of the substance of progress
in implementing the Single Payments Scheme (SPS), you may recall
that I sent you, under cover of my letter of 31 January, a copy
of my written statement confirming that full payments would begin
in February. I am pleased to say that the first payments reached
farmers on 20 February and the RPA remains on course to make the
bulk of them by the end of March.
3. Turning to the question raised in your letters
on 18 January, I note the evidence submitted to you by the Tenant
Farmers Association, which was a strong and consistent advocate
of the historical model of the SPS. As explained in response to
question 51 during oral evidence submitted on 11 January, consultation
responses from all external bodies, along with a considerable
volume of advice from officials, including those in the RPA, were
considered very carefully before Ministers reached a decision
to adopt the flat rate model of the SPS in England, with a transitional
phase to 2012. As I indicated myself in response to question 47,
having taken that advice from the RPA and others, nobody was under
any illusions as to the magnitude of the challenge presented by
the chosen SPS model, but the consistent advice was that it could
successfully be met, as has been borne out by being able to start
payments in line with our forecasts and well within the EU regulatory
window. Ministers could have chosen the simpler "historical"
model, but that would have done nothing to further our objective
of promoting a truly sustainable English agricultural industry.
Instead, they focused on securing the best long term future for
English farmers. Nothing that has happened since would undermine
my conviction that that was the right decision.
4. As for your request for "copies
of updates and assessment on progress towards meeting the February
payment target", I do not think that the balance of public
interest lies in blanket disclosure of these internal communications.
However, I am happy to provide a list of dates on which advice
was submitted and meetings held and consider any requests for
specific information if that would be helpful to the Committee.
5. You also asked for some more information about
the contract between RPA and Accenture. During his evidence, Johnston
McNeill recorded that the Contract with Accenture was signed in
January 2003. It was identified in the original Contract that
there was to be a Mid-Term Review of CAP, although at this time
the details were not known, the Commission's original proposals
only being published that month. The Contract was therefore drafted
to provide a certain degree of flexibility and allowed RPA to
cancel Phases 3, 4 or 5, which related to legacy schemes. In addition
the following principal Clause was also included:
— 3.2.6 If the AUTHORIY wishes
to change the CAP Reform Requirements in the relevant Requirement
Log and the change is: — 3.2.6.1 within
the scope of Schedule 2 but not in the Requirements Log;
— 3.2.6.2 a
change to the CAP Reform Requirements or a change to other Requirements
which are affected by the CAP Reform Requirements;
— 3.2.6.3 made
after 16 April 2004 but before 18 June 2004;
the change shall be agreed through the Contract
Change Control Procedure with the following amendments:
— 3.2.6.4 the
CONTRACTOR shall only be entitled to charge for any rework and
nugatory costs and effort incurred up to the date of agreement
of the relevant CCN (including any subcontractor costs, at the
rates permitted under this Agreement), unless the AUTHORITY instructs
the CONTRACTOR in writing on thirty (30) days' notice to cease
work on specified CAP Reform Requirements, in which case the CONTRACTOR
shall cease work upon expiry of the notice and shall be entitled
to charge for any re-work, nugatory costs and effort (including
subcontractor costs, at the rates permitted under this Agreement)
incurred up to the date of expiry of the notice; — 3.2.6.5 subject
to Clause 3.2.6.6, the CONTRACTOR shall not be entitled to refuse
the request; and
— 3.2.6.6 it
is acknowledged that, if the AUTHORITY requests addition of any
requirements to the Requirement Log from Schedule 2, the CONTRACTOR
and the AUTHORITY shall endeavour to meet the dates in Schedule
10 (Implementation and Migration Plan) but that where this is
not possible the parties shall agree reasonable changes to such
dates and, with respect to the CONTRACTOR, any reasonable costs
directly incurred as a result of the delay.
6. Following the CAP reform agreement, RPA
entered into a re-negotiation of the Contract with Accenture,
with the discussions focussing on the need to capture the requirements
of the then new SPS (which remained unspecified and were subject
to ongoing discussion and negotiation at EU, UK and England levels).
These negotiations concluded with all of the anticipated high
level requirements being incorporated into a revised Contract.
7. It should also be noted that RPA considered
delaying the original procurement process until the true picture
of the 2003 CAP reform agreement was available. It concluded that
this was not feasible or appropriate—the legacy systems
needed replacement urgently and the view taken was that the impact
of reform would not be significant on the overall IT solution.
A "break clause" was also considered as part of the
procurement, although it was concluded that it would not offer
best value for money, since it would have affected the bidders'
cost model and their commitment to the project.
8. Finally, I turn to your letter of 30 January.
You evidently feel that the timing and content of the Committee's
interim report was justified. I stand by my view that it was,
at least in part, misleading and created unnecessary concern and
uncertainty for the farming community. I do, of course, stand
ready to provide further written or oral evidence should the Committee
request it.
Lord Bach
4 March 2006
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