Memorandum submitted by The Rural Payments
Agency (RPA 04)
Brief:
1. To follow up the Committee's earlier report
on the Rural Payments Agency (Sixth Report of Session 2002-03,
Rural Payments Agency, HC382) by examining:
why the RPA is unable to make payments under the
Single Payment Scheme at the start of the payment window in December
(paragraphs 5-16);
the issues involved in making an interim payment
to farmers, in advance of the new February target (paragraphs
17-19);
what impact the RPA's own Change Programme has
had in the introduction of the new CAP payments and the agri-environment
schemes (paragraphs 20-23); and
the extent to which the RPA's IT systems have
failed to evolve to deliver what is required of them (paragraphs
24-25).
Introduction
Background
2. SPS replaces 11 of the schemes previously
administered by RPA and represents the single most significant
change in CAP in over 30 years, resulting in the decoupling between
subsidy and production volume. Inevitably this has resulted in
major change for both RPA and its farming customers.
Single Payment Scheme Implementation
3. In year one of the SPS, RPA is processing
around 120,000 claims working towards paying around £1.6
billion to eligible claimants from February 2006 with a target
of paying 96% of claims by the end of March. A contingency partial
payment system is being developed, should this be required.
RPA Executive Board
4. The RPA Executive Board is:
Johnston McNeill Chief Executive and Senior
Responsible Owner for the RPA Change Programme
Alex Kerr Deputy Chief Executive; Finance
and Resources Director
Ian Hewett Operations Director
Simon Vry Business Development Director
Alan McDermott IS Director
Martin Truran Legal Director
Gillian Robinson Head of Internal Audit
Why the RPA is unable to make payments under
the Single Payment Scheme at the start of the payment window in
December?
5. There are a number of factors involved,
notably:
the scale and nature of the Single Payment Scheme
(SPS) and the eligible population compared with the customer base
for predecessor schemes;
the impact of the evolving legal and policy framework
on IT developments and business processes; and
customer related factors.
Scale and nature of SPS
Customers
6. The new scheme resulted in an additional
40,000 customers registering both their personal and land details
in order to participate in SPS. In addition, the records of a
considerable number of existing customers require amendment and
in total RPA received some 120,000 SPS claim forms in 2005.
Land
7. There has been an increase of well in excess
of 1,000% in the normal annual volume of land registrations and
changes relating to SPS and the new Environmental Stewardship
schemes. This is as a result of the combination of 40,000 new
customers and associated new land and a much higher than anticipated
number of land change notifications from the pre-existing customer
base, where it had been anticipated, incorrectly as it has transpired,
that the bulk of their land had already been registered as required
under the previous IACS regime.
Policy Change
8. The original specification of the system
was made in 2001 and following the OJEC procurement process the
IT supplier (Accenture) was appointed on 31 January 2003 who then
began with RPA the process of designing the system. At this point
the timing and nature of any CAP Reform had yet to be agreed at
EU level. When in mid 2003 the shape (but not the detail) of the
Reform was announced RPA and Defra discussed with Accenture how
best the likely changes emanating from CAP Reform could be accommodated.
It was agreed to concentrate system development on the implementation
of CAP Reform and what was to become known as the Single Payment
Scheme. RPA and Accenture prioritised the areas where greater
levels of certainty existed in the requirements, namely the Rural
Land Register and Customer Register, these being built and deployed
in September 2004 and February 2005 respectively.
9. Initial indicative dates for the finalisation
of the EC implementing regulations (November 2003) and the main
SPS policy (December 2003) proved to be untenable given delays
in member states agreeing a definitive position. In April 2004
implementing regulations were published and system design continued
on the basis of this and final Ministerial decisions on the model
of the SPS adopted in England which were also announced in April.
In July 2004 the RPA and Accenture sought confirmation of the
scheme requirements to enable build and testing to proceed to
schedule in order to provide for a fully built and tested system
to be deployed ahead of the SPS 2005 scheme cycle year. However,
the EU Regulations and our (core Defra and RPA) understanding
of them continued to evolve and some detailed policy issues had
yet to be resolved with stakeholders and the devolved administrations.
It was agreed, therefore, to proceed with building the system
on the basis of our knowledge at July 2004. subject to the caveat
that any significant changes to the legal and policy framework
would inevitably delay the deployment of the IT system.
10. Updated EU Regulations were published
at the end of October 2004 and remaining policy decisions were
announced shortly thereafter. As a result of these events and
additional operational needs, some 60 issues were identified that
might impact on the IT system, which had by then been built. Detailed
analysis of these issues in December 2004/January 2005, confirmed
that they would considerably impact on the schedule as they constituted
a major re-design (and resulting rebuild and re-testing) to elements
of the system. Each issue was rigorously scrutinised, applying
a risk based approach, and allowing in some cases for IT development
and for others the use of manual workarounds in order to minimise
the delay. This process reduced the list to 23 business critical
issues which required a change to RPA's IT system, RITA and these
were further consolidated into 12 major Change Requests. The impact
of the change requests on the critical path for payments led to
RPA announcing on 19 January 2005 that first SPS payments were
likely to be made in February 2006, (i.e. three months through
the seven month regulatory payment window, which runs from 1 December
2005 to 30 June 2006.)
11. Since January 2005, and as recently as
mid October, there have been a number of further changes and clarifications
to the EU legal framework, notably the Commission Regulation adopted
by the Direct Payments Management Committee on 12 October changing
the order of deductions from SPS payments which would have caused
further delay had Defra not secured a derogation from this for
the SPS 2005 scheme year.
Customer related factors
12. As SPS was a new and unfamiliar scheme
RPA and core Defra launched an unprecedented communications campaign
aimed at raising awareness, informing and assisting prospective
claimants. This included a series of 32 road shows which were
attended by over 8,500 farmers, and an advance briefing for over
150 industry advisors. The road shows were supported by CD-Rom,
DVD and video including key excerpts of the presentations for
those unable to attend. This was supplemented by extensive advertising
in the trade press, and comprehensive information including Q&A
was published on the RPA and Defra websites. Farmers were provided
with advance information on the scheme in a series of 6 booklets
(between July 2004 and April 2005) and a draft version of the
new application form to help them familiarise themselves with
what would be required.
13. RPA also issued the SPS application forms
in batches between 9 - 23 March 2005, four weeks earlier than
the anticipated start date, which provided prospective customers
with over two months to complete the form. Stakeholder feedback
suggests that all these efforts were welcome and helped to increase
awareness of the scheme requirements. However, in practice many
farmers have still not provided all information requested. Moreover
the overall quality of form completion has been significantly
below that of the preceding scheme applications.
14. The early despatch of the SPS application
forms and guidance notes in March (referred to in the preceding
paragraph) generated an exceptionally high number of calls from
farmers seeking guidance and assurance on the completion of their
SPS application, and call volumes escalated from 900 per day at
go-live to more than 7,000 per day in April and May, peaking at
over 12,000 calls daily. Initially the volumes caused accessibility
delays, which attracted criticism from the Industry, but RPA responded
quickly and effectively by rapidly increasing resources; using
the new technology to streamline call answering, extending the
Customer Service Centre opening hours and creating capacity to
handle up to 20,000 calls per day.
15. The single most significant customer related
issues is that of new land registrations and changes in 2005 which
is detailed in paragraph 7.
16. In October, as a result of the supporting
evidence analysed from around half of the applicants, RPA wrote
to all National Reserve applicants asking them to provide additional
information or confirm they have no further information to support
their application. In November 2005 RPA made a further request
to around 13,000 farmers who have not provided maps to support
new land listed on their field data sheets. RPA has also made
numerous calls to farmers to establish the grounds for their appeal
on historic reference amount.
The issues involved in making an interim payment
to farmers, in advance of the new February target
17. The RPA remains committed to the target
to commence full payments in February 2006 and complete 96% of
payments by the end of March. To help ensure RPA remains on track
and to allow for notification of final entitlements to be issued
as soon as possible in the New Year, Lord Bach announced in October
2005 that farmers will not now be informed of their provisional
entitlements in the autumn as was originally envisaged, thus enabling
resources to be focussed on finalising definitive entitlements
and making full payments at the earliest opportunity. The nature
of the SPS scheme is such that it requires definitive entitlements
to be established for all valid applicants and the significant
volume of claim processing and cross checking required before
RPA can commence making full payments. In accordance with the
published timetable, a contingency partial payment system is being
developed to meet the terms of an EU regulation which was agreed
at the Direct Payments Management Committee on 12 October 2005.
18. A contingency partial payment will only
be made if it is felt that RPA is unable to meet its commitment
to commence full payments in February. Progress is being regularly
monitored by Ministers against all key targets relating to SPS
processing and the development of the partial payment system to
inform this decision.
19. Given that EC agreement to a partial payment
was only secured in mid October there remains a short timeframe
in which to design, build, test and deploy a contingency partial
payment system. In addition to this the demands of extracting
data from the RITA (SPS processing) system and training processing
staff in the business processes required means that partial payments
could not commence before February 2006. This poses a real risk
of distracting focus from making full payments in February and
this has therefore had to be very closely managed with 'ring fenced'
resources. Attempting to make partial payments earlier than February
2006 would have another major risk aside from the above, in that
the regulatory provisions require claims to be validated before
partial payments are made and that the payment rate set at such
a level that it does not present a risk of overpayment. Therefore
if validation were not undertaken on partial payments this would
pose a significant risk of disallowance. Furthermore the earlier
these payments are made the less validated claims would be available
for partial payment and the greater the amount of manual validation
would be required leading to further deflection of resources from
definitive establishment of entitlements, delaying entitlement
trading, full payments and creating difficulties in the pre-population
of the forms for the 2006 SPS scheme year.
What impact the RPA's own Change Programme
has had in the introduction of the new CAP payments and the agri-environment
schemes
20. The Single Payment and agri-environment
schemes have benefited from the RPA Change Programme. The Programme
started in 2001 with the formation of RPA from the predecessor
organisations, the MAFF Regional Service Centres and the Intervention
Board. The appointment of its IT supplier (Accenture) in January
2003 followed an 18 month procurement exercise. The Change Programme
was already in its second year, and the IT Supplier familiar with
RPA's business, when legislation was published that enabled work
to start on the design of the Single Payment Scheme (SPS). Thus,
RPA was well advanced in developing new core systems and infrastructure
to support the 11 schemes now replaced by the SPS. The Change
Programme has already delivered a new Customer Register, Rural
Land Register and Customer Service Centre. The latter went live
in February 2005 and was in place at the critical time to handle
the challenge provided by an exceptionally high volume of SPS
related calls, as detailed in paragraph 14. Thus, the Change Programme
has been a positive enabler to the successful launch and delivery
of SPS claim processing during year 1. Despite this, the impact
of SPS has required the Change Programme to respond to a number
of huge challenges.
21. Another major challenge has been the need
to handle a 50% increase in RPA's customer base, requiring the
registration of approximately 40,000 new customers and their land
for SPS and the new Environmental Stewardship schemes.
22. The impact of CAP Reform on the Change
Programme has been a de-prioritisation of business enablers, including
data capture by scanning using OCR/ICR (Optical Character Recognition/Intelligent
Character Recognition), Inspection functionality and external
e-Channel (including on-line claim submission). The decision to
re-prioritize the latter was taken following consultation with
the NFU, recognizing that during 2005 farmers would be focussing
on the new scheme and that on-line claim submission would not
be a particular focus or priority for them.
23. The RPA Change Programme has direct impact
on only one of the schemes that comprise the England Rural Development
Programme (ERDP), namely the Hill Farm Allowance (HFA). Claims
to the 2006 HFA will be processed through RITA concurrently with
those for SPS. Claims to the remaining ERDP schemes, including
agri-environment schemes, are currently administered by Defra's
Rural Development Service (RDS). RPA is the EU accredited paying
agency for ERDP scheme expenditure but has delegated claim authorisation
responsibility to RDS. Information from RPA's enabling systems,
such as the RLR and Customer Register are used by RDS in processing
agri-environment claims. A consequence of this has been the need
for RPA to register new customers and their land for the new Environmental
Stewardship schemes. Additionally, it has also been necessary
for RPA to update the Rural Land Register in respect of land changes
notified for these schemes.
The extent to which the RPA's IT systems have
failed to evolve to deliver what is required of them
24. A significant de-scope of the required
functionality was carried out late in 2004 to ensure that all
business critical elements of the SPS would be delivered in time
for year 1, including those relating to issues that arose following
clarification of the legal and policy framework after the system
had been built. This compression of the timeframe has contributed
to RPA having to operate with a significant number of short term
system and manual workarounds as it was judged too high risk to
make all but unavoidable and essential changes to the system at
such a late stage. Even with this approach, the deployment of
the various releases were delayed which in turn impacted upon
the time available to the business to process the claims and registration
data necessary to definitively establish entitlements and thereby
make payments.
25. Whilst the system has been built to be
flexible and scaleable a major issue that has had a significant
impact is the 50% increase in the number of customers that have
been required to register themselves and their land on both the
new Customer and Rural Land Registers. These significant volume
increases and in particular the land changes in excess of 1,000%
up on preceding years has inevitably affected performance of the
new system, the major issue being one of capacity and resultant
performance and stability issues in the early deployment stages
of some of the releases. In order to ease the land registration
problem a significant proportion of the IACS 22 land change updates
to the Rural Land Register have been outsourced so as to ensure
that this critical work is completed prior to establishing definitive
entitlements.
Rural Payments Agency
November 2005
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