Select Committee on Environment, Food and Rural Affairs Memoranda


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; and

§  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; and

§  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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