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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