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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1071-v House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE (RURAL PAYMENTS AGENCY SUB-COMMITTEE)
Wednesday 28 June 2006 MR MARK ADDISON Evidence heard in Public Questions 643 - 711
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee (Rural Payments Agency Sub-Committee) on Wednesday 28 June 2006 Members present Mr Michael Jack, in the Chair Mr David Drew James Duddridge Lynne Jones Sir Peter Soulsby David Taylor Mr Roger Williams ________________ Witness: Mr Mark Addison, former Acting Chief Executive of the Rural Payments Agency, gave evidence. Q643 Chairman: Good afternoon ladies and gentlemen, welcome to a further evidence session of the Sub-Committee of the Environment, Food and Rural Affairs Select Committee's inquiry into the Rural Payments Agency. We welcome Mark Addison, the former acting chief executive of the Rural Payments Agency, indeed a former, very senior member of the Defra Management Board. We are very grateful to you for agreeing to come before the Committee because I understand you are now an ex civil servant, is that right? Mr Addison: That is correct; I am an ex civil servant from the end of May. Q644 Chairman: We are particularly grateful to you because one of the problems, as you may have gathered, is that many of the people who were central to the decisions and the processes involved in the Rural Payments Agency have moved on for many and various reasons, so we are particularly grateful to you for coming. I am almost inclined to start my line of questioning with one very simple question. If you were able to answer it in a detailed and comprehensive way, we could all go home early. I shall put it this way to you. Can you tell us in your own words what went wrong and why? Mr Addison: I shall do my best. For me there are two fundamental issues which explain why it went wrong and then there is a variety of factors which I am not entirely sure in my own mind were decisive, but they were probably relevant. The two key factors which are responsible for the crisis and the failure to make the payments to the published timetable were: one, the volume of change and ambition that the RPA, with the Department's agreement, accepted going way back to the original change programme in 2001 and I shall explain that a bit more in a moment. Linked to that were not simply the volume of things they were trying to do, but the timetable to which they were trying to do them and the fact that the deadline set by the European Union was a completely inflexible deadline. Of course it is a fixed point, delivery has to happen to that point and if you fail to deliver at that point or in that way, you have a very big impact on the customers that you are trying to serve. The combination of the amount of things they were trying to do on the one hand, the timetable on the other simply in the end was too much for the organisation to be able to deliver against successfully. If it would be helpful, I could mention one or two other factors which were possibly contributory. Q645 Chairman: You just keep talking and you may be able to answer all the questions that we were ever going to ask in one simple tour de force. Mr Addison: We shall see. Four or five other factors contributed to the difficulties. The first, and this is linked to the timetable point, is that the fact the timetable was very tight meant that the amount of testing - and I know the Committee have covered this before - of whole-system testing in particular was not as much as ideally it should have been. Second, there was probably, I am not absolutely convinced about this, but there was probably too fine a set of tolerances built into the basic scheme design and the basic assurance mechanisms. The training that was offered to frontline staff and to some extent the managers, but particularly the frontline staff, could have been stronger and better and deeper for a very new system that was being introduced. The management information arrangements and the focus of the performance data could have been improved and could have been better fit for the purpose for which it was being used. I believe that to be the case. Finally, as it turned out, the task-based approach rather than the claim-based approach was not so much flawed in original conception but, once it became clear that the whole process was getting into difficulties, it was a much more difficult set of processes to recover from and manage than would have been the case if they had had a claim-based approach from the first instance. I am not in a position to say whether that judgment was right or wrong, but certainly once the problems began to arise, it was more difficult to manage your way out of it with a task-based rather than a claim-based approach. Q646 Chairman: I presume that your remarks reflect two things: one, the experience of this process right back from the beginning of the change programme with the RPA which goes back quite a long way - we commented on that in October 2003; also the situation which you found when you assumed responsibility after the removal of Johnston McNeill. I am also aware, having studied the minutes of the Rural Payments Agency Ownership Board, that you attended, certainly through 2005, all of the key meetings and therefore would have been aware of these things. One thing strikes me in what you have said. If, with the benefit of hindsight, you have identified these key areas as your major reasons for why things went wrong, does that not raise some quite serious issues as to why some of these difficulties were not spotted at the outset? It may have been complex, but Government are used to doing complicated things. Yes, there were more applicants under the new arrangements than the old, but MAFF/Defra had successfully coped with the old IACS scheme, there was plenty of experience around in Government, for dealing with complex IT things, not always with the best results, but somehow, in spite of that pool to draw on, you have identified some fairly fundamental failings by management to spot the weaknesses in what was being proposed by those who designed the system to deliver the single farm payment. I just wondered what your observations were as to what went wrong in that respect. Mr Addison: You are absolutely right about the basis of these views and I should like to be quite careful and hedge them about with a certain amount of uncertainty given the fact that I was with the RPA for two and a half months and before that I was, as you rightly say, sitting on the RPA Ownership Board and latterly the Executive Review Group, so I had some view of what was going on, but not a detailed view. It is good to have a chance to enter that caveat. I was trying to distinguish, in my explanation of the reasons why things went wrong, between these two fundamental points which I shall explain a little bit and these other issues which were probably not individually decisive and every project and every programme has a number of things which could be done differently and better, which is why one has all the gateway review processes and evaluations at the end of them. They were not the decisive points. The decisive point was this combination of overall ambition for change and the timetable to which it was being done. On that, it was not actually so much the numbers of claims, the volume of SPS activity. I know the Committee have spent some time working through the numbers of new applicants, whether they were expected or not, how big an issue that was, the number of changes to parcels of land and so on. We could come back to that if you like and those are certainly worth some discussion. What I meant by the volume of change activity was the combination of three key programmes simultaneously, so it is good to have a chance to explain that. The first was the original RPA change programme, which was the one that was launched in 2001 that Accenture were brought on board to help with. It involved the introduction of a new IT system. It involved the switch from a regionally-based organisation to a national organisation with sites which did not deal with local regions but certain sets of tasks, the reduction in the number of sites by three down to five and it was designed to deliver some very substantial savings to a certain timetable. That was the first big element of this three-fold programme to which I am referring. The second was clearly the CAP reform and the changes that needed to be made as a result of that to the system design and the nature of the payments to farmers. Linked to the second was the third, which is the rural land register which was launched in September 2004 and being built, used, and deployed for the first time in parallel with the single payment scheme. In my view, it was that combination of the three programmes together which in the end was an overwhelming set of requirements for the RPA to meet and as a result it failed to do so. The decision that was taken to run all those in parallel was of course taken some way back. It was taken back in 2003 and Sir Brian Bender himself referred to this in the evidence that he gave you relatively recently. Q647 Chairman: The thing that I find difficult, before we explore some of the detail to which you have been kind enough to refer, was the heroic public representation that somehow, in spite of all of the things that you have talked about happening or not happening, as the case may be, the heroic statements about when things were going to happen in the form of the timetable for payments. At the end of the day that is what the revised RPA was tasked to do and in spite of a growing awareness I am sure - perhaps you can confirm that there was a growing awareness that perhaps you had bitten off a bit too much - people were still saying almost right up to the bitter end that everything would be alright on the night. For example, when the Lord Bach came before the Committee, he was very vehement in his defence of the timetable and in fact was very critical of the Committee's report which had the temerity to question whether it would actually happen and whether in fact there should be arrangements for interim payments. Perhaps you would like to comment then on what informs this sort of heroic public persona, when in actual fact some of the problems which you have adverted to clearly must have been becoming more self-evident with the passing of every day during 2005? Mr Addison: There are two rather separate questions here. Taking a step back, the first question you raised was why it did not work and that does go back to the degree of ambition originally. How any project of that scale or ambition is going to go wrong is impossible to predict at the outset. One just has a sense that somehow or other that is biting off more than can be successfully chewed. It is a rather different question to say: why was there not a sharper understanding, even quite late on, that it was not going to work? That is a more difficult question to answer and I should say there is a number of factors here. Let me start by saying that it is a legitimate question to raise and indeed criticism of all of us that were involved with the process that we did not identify some of these underlying issues earlier than we did. The reasons for that, which I shall try to explain, were as follows. First of all, remember what the RPA at the time was trying to achieve: it had a massive number of different elements of the programme to get right; it had the customer register to sort out; it had level one so-called validation, the basic checks, to sort out; it had the document management processes to sort out; it had the cross-compliance inspection functions to sort out; it had a very wide range of things to resolve as well as what turned out to be the decisive indicator, which was the rate of level two validation so-called. Forgive me if I am getting a bit into the technicalities. Level two validation is the main bit of the process after the basic checks have been completed in level one. The claims go into what is called level two validation and the important checks are successfully completed to make sure that the claim is right and accurate and that the information on land in the claim matches up with the information on the rural land register. That was one component, so the RPA had an awful lot of other things to get straight and therefore it did not give, in the end, the rate of improvement of level two validation as much attention as it probably should have had. There were maybe two other reasons. Putting the best possible interpretation on it, if one looks at the position in mid-March of this year, 44,000 claims had successfully completed level two validation. If one takes the bulk of the payments target by the end of March, on the most generous possible assessment to the RPA, to be 51 per cent, just over half in other words, then they were roughly 16,000 claims short of that in terms of level two validation, so they were off. It must have been becoming clear, if the right figures had been looked at, that they were off, but they were not a million miles away. That was one factor. The second factor was a consequence of the task-based approach and it is worth a bit of explanation even though it sounds a bit technical. The task-based approach involves breaking down each claim into a number of separate tasks and completing all of those tasks and when all of the tasks on a claim are complete, then the claim is cleared and it successfully passes level two validation. The task-based system therefore inherently produces a model, an expected profile of delivery which is end-loaded. With a task-based approach you do not expect to see a huge amount of progress early on because you are doing a lot of tasks, not necessarily specifically with the aim of getting individual claims successfully concluded, you are just working on the tasks. So you might find that you have 40 claims, you have ten tasks on each and you only maybe do one or two tasks on each, so no claim is successfully processed to completion in that period. As the balls begin to fall into the holes, you expect the profile to start rising very sharply and you expect most of the successful level two validations to come at the end of the process, not the beginning. This is a feature of the forecasting model that a task-based approach entails. It is therefore quite a risky mechanism to use, because if nothing much is happening, it is quite hard to tell whether nothing much is really happening or whether everything is going as it should and you expect to see a rapid amount of movement towards the end of the timetable. Because that was the model and that was the approach, there was a sense in which the RPA management team would not have been as exercised as some others about relatively low rates of progress on level two validation earlier on in the window. Maybe that helps to explain a little bit why they remained more confident than outside customers and outside commentators that it would come alright on the night. I agree, if one does not have some explanation of that kind, that it is quite hard to see why the level of confidence internally which I, as a member of the Defra Management Board, had previously shared in the autumn of 2005, should have been there. Nonetheless I suspect, had a more detailed analysis been undertaken over a period of the level two validation rate, it might have been clearer that, even allowing for the way in which the model worked, it was ambitious to hope for results by the end of March. Nonetheless that was the message coming out the RPA and which the Department and ministers were responding to. Q648 Chairman: I suppose what you seem to be saying is that, having opened up the box labelled RPA and looked in, you have drawn these conclusions, but that the flow of information throughout the whole of the process, from the start of the change process through to the preparations for the single farm payment, the feedback mechanism to the Ownership Board and to Defra's Management Board and subsequently to ministers, the gift of that information was very much in the hands of Johnston McNeill and his senior colleagues and you, as the "outsider" representatives, because you and Andy Lebrecht were key senior Defra officials on that Ownership Board, had effectively to accept at face value what you were being told. You did not have at your disposal, either any independent or Defra technical advice to say "You guys are not IT experts, you are not systems experts, you are management, you are officials and I think there might be something there that needs a bit more probing". Mr Addison: I would not accept that the Department was completely reliant on RPA advice with no kind of independent purchase. As you have heard, the mechanisms that were set up to govern this programme were extensive, they had independent input and they had hefty independent input both from the non-executive director on the RITA Programme Board plus the OGC reviews and indeed some other work that was done to check on progress. It is not fair to say that the Department simply had to take what the RPA told it was going on. The RPA was as keen as us to make sure we had some independent view about the progress we were making. On the question of looking back and what I would have done differently, with the benefit of hindsight - and everything I have said is with the benefit of hindsight because, as you rightly pointed out, I was part of the departmental governance mechanism - two things and one of them bears very directly on your point. The first is that at the decision point when the Department was being advised by the RPA that these three elements of the programme could be run together, it would have been helpful to have had an independent view of somebody who was not actually that closely engaged with the programme, but was familiar with large-scale financial retail delivery or systems or something of that sort, who could have come in and given us a sense of the degree of risk that we were taking by trying to run those three programmes together. That might have been helpful. The other thing that might have been helpful - your point about having some stronger capacity to interrogate and challenge the assessments that were coming from the RPA - would have been if we had all, that is the RPA and the Department, had a stronger purchase on the whole system and how it worked. As it turned out the RPA did not have a strong enough capability itself of that kind and the Department therefore was not able to share it. That is one of the things I know that is being looked at right now and which we were quite keen to try to build subsequently: a stronger understanding of the way in which the different components of this new work process and IT system were going to relate together in order to deliver results. That capability was not strong enough as it turned out, either on the Department's side or the RPA's. Q649 Chairman: When Margaret Beckett, I presume, summoned you to take over and try to sort the ensuing mess out after she had decided she had lost confidence in Mr McNeill, and you went to see her, what did she tell you that you ought to do or did she just say "Mark, go and fix it"? Mr Addison: The remit that I was given flowed very directly from the immediate cause of the crisis, which was that the expected rate of flow of payments for 2005 claims had not materialised, that the end-March target was going to be missed and that the Department's and ministers' fundamental priority, not just for the RPA but for the whole Department, was to complete the process of single payment scheme payments for 2005 as fast as was legally possible. That was the remit that I was given and that was the remit that I took away. Q650 Chairman: The thing that we found quite intriguing was that in a relatively short space of time, you came in, you announced a series of measures that amounted to a fundamental restructuring of the operation and magically money started to flow. You then brought in the interim payment mechanism which, according to the minutes of the Ownership Board, you had been considering for some considerable time but had dismissed up until that moment. We were left with a sort of situation of saying "How come this guy Addison goes in there with a magic wand and makes it all happen when after the previous two years of so-called meticulous planning, the end result was the dismissal of the chief executive and ministers being left to hang out to dry?". You came in and sorted things out within a few weeks. It was something that did not really fit very well together. That is the point: that you came in quite incisively and it would be very interesting to have your commentary as to why you made the changes that you did. If you were able to produce that analysis in a relatively short space of time, how was it that those who were responsible for the RPA's management for a longer period of time could not see what you saw effectively in a matter of days? Mr Addison: The first thing to be clear about is what was achieved during the period I was at the RPA and what was not and I shall happily run through that. Your summary of it, although obviously part of me would like to say "Yes, it is absolutely right, I did achieve all those wonderful things", I am afraid is an exaggeration of what was actually achieved during my period there. Certainly some things improved and some progress was made, but in other areas, the problems remain and it would be good to explain that. Then there is the question about why, if it was possible to do that, was the problem not identified earlier and something done about it earlier? On what was achieved and what was not, there were several phases which I personally and the organisation went through after Johnston left and I arrived in terms of analysing the problem and identifying what needed to be done. It might just be useful to run through about five. The first was the one that we were just talking about which is why, when the button was pressed, only a few payments seemed to emerge. What was the reason, in Helen's words, for the gumming up of the process? This did genuinely take everybody by surprise. There had been an expectation that once claims had successfully passed level two validation, once the button was pressed to make the payments, there should be very few hold-ups and they should flow through. In other words, at the end of the pipe there should be no blockages. It turned out that there were some quite significant blockages at the very end of the pipe which prevented the 44,000 claims which had been successfully sorted being translated into payments. That turned out to be about a number of what are called authorisation checks, final pre-payment checks which are done before the claim is passed over to the payment engine for payment. In all of these decisions we were obviously very keen to involve the people who ran the actual business and operation in the RPA, the internal audit people and the lawyers to make sure what we were doing was sound and the risks were properly identified. Over that very first weekend the RPA experts abandoned four of the six so-called authorisation checks and subsequently in fact we realised we could abandon five out of the six. We took the view they were redundant, they were already covered by the checking process as part of the mainstream level two validation and we cut them out. That had a big effect. When that claim was checked, it did not just stop that individual claim as by then the claims had been batched up and the whole batch would be held up, so it amplified the effect. By removing those checks therefore, you did not just allow those individual claims to flow through you allowed the batch to flow through. This is a slightly simplified version, but that is basically what happened. That was the authorisation check stage. Q651 Mr Williams: Could you just tell us what sort of checks those six were? Mr Addison: Absolutely. I happen to have a list. The first one, which was the one we retained, is the payment being made to the correct payee, in other words a final check to make sure that the person you are going to pay the cheque to is the person on your records. Just some examples of the remaining five. Check two: are there any obvious reasons why the payment cannot be made? Check three: is the claim for an eligible scheme activity? In other words, is the scheme activity being claimed for eligible? Check six: the amount that had been calculated appears reasonable and conforms to scheme rules. In other words these are quite general checks; you are asking the operator at the end of the process to confirm finally that everything is in order. They are quite general and they are quite discretionary. There was quite a long routine of steps that individuals had to go through, but the view that the experts were able to take was that they were already covered by the main processing machine. Q652 Mr Williams: Were those checks carried out by anybody or were they part of the computer system? Mr Addison: No, they were carried out by individuals. The computer system, the RITA system, allowed them to be undertaken and allowed the result of them to be recorded and then the necessary steps to hold up that batch of payments would flow. They were conducted by individuals but they were done on the system. That was the first step. It was very clear quite quickly that that was not going to solve the fundamental problem. That would resolve the immediate cause which precipitated the crisis at the point where it became clear that the payments that were already expected to be sorted were not sorted, therefore the end-March timetable became impossible. The more fundamental problem was the rate of progress on level two validation. How quickly were claims getting into that bit of the pipe? That was clearly moving too slowly and almost whatever metric or measurement you looked at and tried to forecast by simply extrapolating from what had been going on in recent weeks or months, it was pretty clear that that would fail to hit the end-March deadline and probably fail to hit, on most of the measurements, the end-June deadline. So there was a fundamental issue with level two validation. The next thing that became clear was, for the reasons that I have described, that the nature of the model meant that forecasting was immensely difficult and we also, of course, had had our fingers very severely burned by the failure to get the forecast right in the past so it seemed to me quite early on that forecasting anything would be very high risk. We simply did not have the data or evidence to forecast confidently pretty well anything and, as a result, for the next few weeks, indeed even now, ministers are taking a view that it is very difficult to forecast ahead timetables for completing certain phases and that is absolutely right, that was my experience. You mentioned partial payments. This was the next issue to address. A system had been set up for partial payments and it was decided not to deploy it in January or February when it became clear that actually the payments should start in February. The phasing on partial payments worked as follows. For the first two weeks I and my RPA Executive Board colleagues took the view that partial payments would be a distraction; we could not afford to take people off the main processing to design or to take a fresh look at partial payments. Once those first two weeks had elapsed, it became pretty clear that we could not offer ministers any sufficient confidence that we could hit the end-June deadline for completing the level two validation process and we therefore began to plan in earnest. After four weeks I felt that we had got to the point where we were clear that a suitable partial payment solution - that is quite an important qualification: a suitable partial payment system - could be deployed that would work. Ministers on the back of that announced that they would deploy it as soon as it was operationally possible to do so and in six or seven weeks we had deployed it. That was the sequence of events on partial payments. We started with no work and ended up deciding to do it when the full difficulty that we faced became clear. Finally, in terms of the steps that were then taken to try to resolve the fundamental problems, we took the decision to move from the task-based system to the claim-based system. We opened up communication between processors and individual customers by telephone and we decided to bring the mapping back in-house in order to create a package of measures that we hoped would speed up level two validation. The conclusion we reached on level two validation was that there were no simple silver bullets. There were no obvious steps we could take to remove elements of it that would radically speed it up. It had to be a redesigned work process and I believe those fundamental challenges and difficulties remain. The system remains and will remain for some time, difficult to run, complicated and in some respects quite clunky because a number of manual and off-system work-arounds, so-called, were put in place which affect productivity and make it harder to run the whole arrangement. Those problems remain. We could not solve those overnight, but we did think a new approach to doing the work would help. Q653 Mr Williams: When Accenture were first contracted by RPA, it was to deliver the change programme and to update the IACS systems. It was only when the 2003 reform came into place that they were then tasked to produce RITA, the system to deliver the single farm payment and also to do the rural land register. We were told by Accenture that dealing with those three separate tasks was not an exceptional request to be made of an organisation like that. Are there any other examples in the public sector of a contract being upped to such an extent after the contract had been entered into or do you think it is exceptional? Mr Addison: I am not sure I can give you a definitive answer because I would not know enough myself about the range of examples there might be. My sense would be that it was an unusual amount of change to introduce shortly after a contract had been signed. It was a very fundamental change. Mr Williams: We have recently been to Germany and met with some officials there who delivered the single farm payment. They did it on a regional basis but it was basically a dynamic hybrid just as the English system is. Each of the Länder was allowed to commission its own software and yet each managed to deliver the system on time and within the window. Q654 Chairman: There were 353,000 customers. Mr Addison: On that, I am not sure I know the answer but a relevant question would be: at what stage of development was the digital rural land register when the new software was introduced, alongside it presumably? I do not know the answer to that but that was quite an important issue for England. The other factor goes back to where I started, which is that the policy issues were clearly one set of issues. I am not sure whether the dynamic hybrid in itself ... I know the Committee have discussed whether delays of one year or whatever would have made a difference and I am not sure of the answer to that because I do not know what policy freedom there would have been. What I am saying to you is that it was the combination of the RPA change programme which, remember, was not, I assume, something which would be replicated necessarily in other countries, was a completely new kind of organisation being deployed alongside a completely new policy, alongside a completely new rural land register which was the factor which made the whole thing topple over in the end. I am not sure how Germany compares with that or any other country compares with it. The dynamic hybrid component is one of those three. Q655 Mr Williams: The mapping issue and the rural land register seem to be key factors in this. This afternoon we were given an example of a particular customer of the RPA who had 19 different maps delivered to them before the correct solution was found and that was in May of this year. We were told by the RPA that one of the difficulties was that every single piece of land had to be mapped before the total land area had been identified and the entitlements could be worked out and yet payments started to be made before this particular customer's land had been mapped. One of the other issues that we were talking about was whether the RPA and the system that they were using was too accurate and that a little bit less accuracy could be accepted to get the system working. Do you have any comments on that? Mr Addison: I mentioned earlier on that one factor which is worth exploring, I am not sure it was a decisive factor, but it is worth exploring and thinking about, is whether the approach was not too finely tuned. One of the steps that the RPA took after I arrived was to introduce a tolerance limit of three hectares or two per cent on individual claims; if that tolerance was not exceeded, but there was an issue and the system was saying there was a problem, nonetheless the payment was to be made. We did quite a lot of calculations on varying that level of tolerance and seeing what the impact would be on the number of claims that would go through and the potential level of disallowance that would be entailed. Obviously that is a factor with all these decisions and that was why we ended up with those figures. Interestingly, although it helped, it made some improvement, it did not make the enormous improvement and change that you would have expected if the fundamental reason behind all the difficulties had been the degree of tolerance. That rather supports my feeling that that was a factor, but not a decisive factor in the whole set of reasons why the target was not met. Q656 Mr Williams: After meeting with the German officials, it was quite clear that they had got the money out to the farmers. The question really is whether they got it out in compliance with the European regulation. We shall only know that presumably when the system is audited and there could, of course, be disallowances as a result of that there, as there may be in the English system. Has Defra, as a result of the less fine measurement of the land areas, made any allowance for disallowance in its budget in the future? Was that built in as a result of taking the decisions that you had to take? Mr Addison: The position, after it became clear that the target was not going to be met, meant that the whole approach to calibrating risk had to change. Ministers in the Department were extremely supportive throughout my period - I am sure they are still being extremely supportive - and willing to consider options which would have been difficult to consider six months ago and those options do entail, because nearly every change does, entail some additional risk of disallowance. We tried to advise them as best we could on the range of possibilities and the decisions were taken. The whole question of disallowance is not, as you will know, an exact science. At every step we took the best advice we could about how to limit its impact and we were extremely careful with the partial payment system which was not the original design, it was a new design in order to meet the requirement of the time. We were extremely careful to make sure we had as many controls as would enable us to argue and negotiate the level of disallowance down as best we could. We had the arrangements for claw-back: if a payment had been incorrectly made that was more than the payment that was subsequently validated, then we shall seek recovery and that is exactly what is happening. We have had relatively few in percentage terms, but that system is in place. You can introduce a number of steps to try to reduce the risk, but you have to have some appetite for risk, otherwise you cannot move. Q657 Mr Williams: Presumably the rural land register process was carried out in Wales as well even though the payment was on an historic basis. We seem to have had very few complaints in Wales that payments have been held up because the land had not been mapped. I do not know what system was used in Wales because there have been so few complaints. Could you tell us whether a different system was used in Wales or a similar system? Mr Addison: The policy was different. What I am not clear about, I am afraid, and what I cannot help with, though I am sure we could get this information for you if we asked the Department, is how far the land issues had to be resolved in order for those payments to be made. I am sure we could find that out. Q658 Lynne Jones: As far as you are aware there is no difference between the mapping system in Wales and England. Mr Addison: The rural land registry itself? I am not sure, to be perfectly honest, how Wales have set about mapping. I do not know whether they are using the rural land register we use in England or not. Q659 Sir Peter Soulsby: May I just take you back a little bit to your description, with the benefit of hindsight, of the things which could have been done better? You have described them to us and it was clear from your description of them that none of them was individually fundamental. You also described what you termed as the decisive points, the volume of change and the timetable and its inflexibility. They had been factors that you had been aware of for quite a long time. Even the volume of claims was something that had been known for a substantial time. What I still find very hard to understand is how it was possible for all of those involved, the Rural Payments Agency and the Department and the ministers, to be so apparently confident right up to mid March and to be telling us how confident they were, that this could be delivered and then so suddenly for matters to emerge and for the position to change so dramatically; suddenly it was not going to happen. Was it that the chief executive and the others in the Rural Payments Agency did not realise that this was not going to deliver or was it that they realised but were not telling you and us? Mr Addison: There were these two factors. The issue which took everybody by surprise, including everybody in the Rural Payments Agency, was the failure of the 44,000 claims to go through into payment smoothly. The authorisation checks' element of the process had not been tested as part of the whole system test, a point raised earlier. That simply did take the RPA by surprise. Q660 Sir Peter Soulsby: Could we infer from that that what really went wrong was the failure, at an appropriate stage, to test the system, to make sure it really would deliver and really would work? Is that fair? Mr Addison: As I said earlier, the amount of testing that was done, the amount of whole system testing that was done and the amount of whole system knowledge there was, was, as it turned out, not great enough. One of the reasons for that was the overall timetable. A lot of this can be traced back to my earlier two points about the number of things being done and the timetable. Q661 Sir Peter Soulsby: You have explained all of the reasons behind this, all of the factors that were part of it and you have explained the decisive points, which were things that you were aware of well in advance. It does strike me that the actual failure was to test the system and make sure in a timely manner that it was actually going to deliver. It surely was the responsibility of the Rural Payments Agency and its chief executive to test and the responsibility of the Department to make sure that they had tested it. Mr Addison: Testing can mean a very wide range of things and you have had evidence from others who have explained that a good deal of testing was done. The individual system releases were extensively tested. If you look at the OGC programme of reviews, all of those reviews looked at the bits of the RITA system that were being designed and one of the questions they asked was whether this had been successfully tested and so on. So there was a great deal of testing. As it turned out, where the testing did not happen, in the way that it would have been useful if it had, was the testing of the whole system which would have been a very major undertaking, would have taken a good deal of time and would probably have compromised the original target in any event. There was also lacking, as I have said before, a depth of understanding of the way in which the whole system would fit together and work and those are the issues. It is quite interesting; it is not quite as clear-cut, if I may say so, as you are suggesting. Take the partial payment system which was designed and used in early May; the actual partial payment system which was used to get the £730 million out. We had a choice around the end of April about how much testing we should do on that programme. Q662 Chairman: Are you talking about April 2005? Mr Addison: No, April 2006. I am talking about the partial payment system which enabled the money to be released. There was a question about how much testing we should do. As you would expect, having come in afresh, having a naturally sceptical attitude to claims that X or Y would work unless I had actually seen it working in black and white, my inclination was to say that we must test as much as we possibly could and we did extensive testing on that new partial payment system. However, there was one thing we did not test. We did not test it end to end. We decided that if we were to let, say, 100 cheques go through the whole system and be paid to individual farmers, it would delay the whole process by several weeks. I cannot remember the exact timetable. So what did we do? We looked at alternatives. We said "What is our confidence that the payment system works? What is our confidence that the partial payment system will work? How confident can we be that, put together, these two things will work?". The conclusion that we reached was that we had a good degree of confidence in the linkage between those two, the actual calculation mechanism and the payment mechanism, on the basis of what we had seen already. We therefore decided to advise ministers that the whole arrangement was ready for deployment and that, although we had not had a chance to test the whole thing end to end, we were pretty clear it would work and it worked like a dream. That was the right call; history convinces me it was the right call. So it is not always obvious that a test is absolutely required, if you are up against a very tight timetable and you have a high degree of confidence that the different bits of the system will work together. Of course we now know, with the benefit of hindsight, that we should have done more whole-system testing. We know that; I agree with you. Was it obvious at the time, given that the timetable had to be met? I am not convinced. Q663 Chairman: You took on board Accenture as your IT partner from the start of the change process for the RPA, the big change of the whole system. They are there as professionals and they told us that basically the system they designed would do what it said on the side of the box. In their remarks to us they were confident that they had delivered what they were asked to do. I have just been reminding myself about how much time remained once the policy was agreed and there was actually quite a lot of time, at least to tackle the problems at the front end of the system without having to test the whole thing. Did you get advice from Accenture about the risks that this approach was putting to you? Accenture were very careful in their remarks not to make any comment about any other part of the RPA for which they were not responsible and, to an extent, one can understand that. But in terms of the mapping system, was that ever tested with what I might call some dummy information? When, for example, was it decided to employ the digitised approach, a different approach to the IACS mapping system which relied on ordnance survey maps, to employ that technology? Why seemingly was it not tested with some real live farmer data to flush out some of the idiosyncrasies to which we have just been exposed by a presentation from the valuers? They made very clear to us, from their personal experience and indeed the Committee have had many representations, the type of instability on the mapping system, because that is the most fundamental before you even get to the point of application validation. Why was that bit not tested more thoroughly? Mr Addison: I am afraid you are taking me into territory I cannot help you with because I cannot recall whether I myself, when I was on the Defra side, was part of those discussions or not. You are absolutely right that the mapping and the land issues are obviously at the very heart of this and if one looks at most of the tasks which have to be undertaken in level two validation, many of them are to do with land and maps. The point about testing the RLR is not so much of a question. Accenture are making a valid distinction between testing the system to make sure it works at a technical level and the question which I think you are asking which is surely that if you had piloted the RLR and this new approach, it would have become clear that there were going to be more changes to land and to parcel size and applications coming in from farmers than the RPA expected. That is not a technical point; that is about the way in which the whole system works. I think that Accenture are making a valid distinction. I am afraid I cannot help you on whether that was piloted in some way or not. Q664 Chairman: Let us come to a fundamental question which I should have thought the board of Defra and indeed the Ownership Board of the RPA would have asked, a simple question: does it work? Let us separate out the question of volume and change from the stability of the system once in operation. The example that we had shown to us this afternoon was of a farmer who ultimately had the issue of her maps resolved after 19 separate attempts. The first part of the process began in May 2004 when this particular applicant started the process and it was not actually resolved, finally, until 16 May 2006. Given that you knew you were going to have to operate a new digitised mapping system, I really do not understand why somebody did not do some "dummy runs" on this. I am sure the board must have asked whether this bit actually worked, because that was the bit that was ahead of the bit you have described, the level one and level two parts of it, which had their intrinsic problem. Did somebody on the Defra board, when you were getting reports back from the Ownership Board not say "Have we actually made certain this thing is stable and it can process a number of these"? I am sorry to go on, but just to give you an illustration of what we heard, when the valuer in question got along to say "Right, let me try to help you, oh client, to get this thing right" at one point quite early on in the process she told us that the system had just about got it spot on. So an agreement was reached that she would print-out a new set of maps for final confirmation. What then happened was that a set of maps arrived which had a completely different order of land on it, fields were not there, in other words it was not the same as that which had been agreed. So you ask why the system had substituted a series of incorrect maps for ones which had been deemed correct. It is that kind of very practical example which does not seem to have been bottomed before you went live and compounded the problem by a whole series of instabilities in the system. That is why I come back to the very simple fact, and Peter would agree with me, that we do not understand why that bit was not tested, as we as lay-people understand it, which means putting 200 or 300 real live mapping exercises through it and seeing whether it actually works. Was that never done? Mr Addison: I do not know the answer to that because I simply do not know how the testing was done. Q665 Chairman: Who would know the answer to that? Mr Addison: The RPA would certainly know the answer to that question. Q666 Chairman: So we need to put that on the yet-to-be-asked list. Mr Addison: Yes. It is a very specific question and I am sure you could get a very specific answer to it. Chairman: Coming back to the questions which ministers were asking, ministers would have been briefed on what it was they were buying. They would have had a description. All those submissions to ministers would have said that ministers will be aware that we are introducing a new digitised mapping system and this is how it will work. Did they not have a demonstration as to what was going to be coming along? Were they exposed to it? Lord Bach told us he popped in and out of the RPA with monotonous regularity and Lord Whitty no doubt did the same. Q667 Lynne Jones: Or even members of the Ownership Board like you. Mr Addison: I cannot remember the exact date, but what I do recall is that as members of the Ownership Board we did see the rural land register at a point at which it was struggling, not so much to sort the problems that you have identified, but actually simply to work at a technical level. The volumes of activity that the system was being required to cope with were overwhelming it, so it was suffering from a lot of problems. We were in Exeter, we saw it. Q668 Chairman: That is reflected in the minutes. What I am concerned about is what happened upstream of that. Coming back to Accenture, they were remarkably correct in saying that the system they provided was going to deliver. I presume Accenture were responsible for the mapping system, were they? Mr Addison: For the design of the RLR. Q669 Chairman: Was that one of their boxes? Mr Addison: I want to be absolutely sure. Q670 Chairman: If you are not sure, I shall not press you because it would be unfair. Mr Addison: We can find out. I believe they were, but we can check. Subsequently of course it was then moved off at the point where the volume of activity on digitisation exceeded the capacity of the organisation to deal with it. Q671 Chairman: They told us that each component of the system had been, by their use of the word, tested and that they were clear that it worked. If the IT supplier says he is producing you a system which in 2005 they had tested and was stable - that is what they told us - if it was stable and it worked, why did it not deliver? That is the layman's question. Mr Addison: I agree and it is a good question but I would come back to try to make this distinction. I am sorry I cannot be more helpful about exactly what happened and when. There is a distinction between a system which is technically stable and a whole work process which is not performing satisfactorily. Just by way of an example, take the authorisation checks. The authorisation checks were not technical difficulties. The RITA system was working, the individual operator would identify a problem, the claim would be identified and the batch would be stopped. The issue was the way in which the whole work process functioned and in particular, in the case of land, the way the relationship between the customer and the RPA worked or did not work in relation to the flow of information between them. That is not necessarily the same. In fact it is not the same as saying the system was technically unstable. The system may have been technically quite stable, but the whole work process was not functioning properly, which clearly it was not. Q672 David Taylor: What, in one line, would be the responsibility of the Ownership Board? Just in one sentence. How do you recall the brief of that board? Just one sentence. Mr Addison: The Ownership Board's responsibility was to do two things and this is general in Government: one was to agree the plans and targets and resources for the agency and advise ministers accordingly; linked to that, to take responsibility for the Agency's performance and advising ministers again on how it had performed against the targets which had been agreed. That was one set of performance measures. The other is to be the representative body in the Department for that agency or organisation. Q673 David Taylor: If I were Johnston McNeill on gardening leave, sitting in my potting shed this sunny afternoon with the radio on listening to the evidence that has been given, I should be thinking that Mark Addison was being given credit for sorting out problems for which he, as part of the Ownership Board, was substantially culpable. The Ownership Board collectively signed off the specification, did you not? You must have done; you must have signed off a transaction-based system, an antiquated, historic approach to major system design equivalent to a single-task production line in an engineering factory decades ago when people had moved on to team approaches where sub-component parts of the car or whatever it might be were assembled at that point. The Ownership Board were responsible for that, were they not? Mr Addison: Maybe I can deal with two of the points you make. On the Ownership Board responsibilities, I have already said as clearly as I can that the Ownership Board back in 2003, on the basis of advice from the RPA, endorsed the view, as Sir Brian Bender said, that the RPA change programme could be run in parallel with the CAP reform initiative. History tells us that was not the right decision. Everybody around that table, including me, bears some responsibility for that decision. Q674 David Taylor: I am not holding you individually responsible; I am saying you are corporately culpable. Mr Addison: That is absolutely clear and I have tried to be as upfront about that as I can. As to your second point about claiming, me personally and my successors --- Q675 David Taylor: It was your admirers who claimed it. Mr Addison: No, but the point you made was about successes at the RPA. I am also very keen to be completely clear with you that the progress that was made at the RPA during my tenure was about the successful delivery of substantial sums of money. Q676 David Taylor: It was the little boy saying the King has no clothes, was it not? It was stating the obvious, was it not? Mr Addison: If I may finish the sentence. It was about getting money out, it was not about solving the fundamental problems which will take some time to resolve and the RPA will be doing well to improve in 2006 on performance with the 2005 payments and we all hope that it can create some more significant improvements in 2007 and maybe 2008 is the first major opportunity. Q677 David Taylor: Moving on, you expressed the opinion that it would have been a good idea to have had more of an independent perspective, people who knew something about ICT rather than mandarins and outsourced staff who did not have an invested interest in it. Do you regret now being substantially responsible for making redundant 1,600 to 3,500 people who might have given some input to improve the way in which this system was delivered? Almost a half of the 3,500 staff were made redundant, that is right, is it not? You were part of that. Mr Addison: Certainly that was the plan. Again, with the benefit of hindsight --- Q678 David Taylor: It is not with the benefit of hindsight. With great respect, you, Defra senior management outsourced a great deal of your ICT expertise. Those people with the knowledge of the area concerned, who had the experience and could give advice, could have pointed to the significant and serious flaws that were always there in that original system design, when the people charged with signing it off, that is the board of which you were part, clearly were either hoodwinked or negligent. That is a fair assessment is it not? Mr Addison: Absolutely not. Maybe I could just explain why. First of all, by "the decision to outsource" I take it you mean the Accenture involvement. Q679 David Taylor: It is a general Civil Service trend to outsource as much as possible of that which is crucial to the future of the organisation and retain that which is not. Yes, I suppose I do, in relation to the Accenture contract. Mr Addison: That is not right. The planned reduction in staff numbers, which of course has not happened in total, but the planned reduction in staff numbers of the 1,500 that you mentioned was not around the outsourcing of IT, it was to flow from redesigned business processes which Accenture were there to help with. Q680 David Taylor: It was in part to drive down headcounts to satisfy the Cabinet, was it not? Then getting back people at half the cost and with less competence. Mr Addison: It was to enable the RPA to become a more efficient organisation. It was not directly linked to the outsourcing decision. Q681 David Taylor: So you do not feel at least partly responsible as part of that body for signing off a seriously flawed top-level design of a system that has failed so spectacularly? Mr Addison: I feel very responsible for being part of the organisation and the board and the Department which clearly were involved very closely at many stages with the development of the plans in the RPA and therefore the subsequent failure to deliver. James Duddridge: With hindsight there was clearly a breakdown in the flow of communications from the front line; somewhere between the front line and ministers there was not full information. Lord Whitty on File on 4 went further. He said there "... was obviously some degree to which people were putting a bit of a gloss on how well the system was going" and that there were even "... times we were misled", we being ministers.. They seem quite strong words. Were ministers misled or indeed is Lord Whitty misleading the listeners of Radio 4 in his statement? Q682 Chairman: May I just add the sentence that came after, to emphasise and put into context what Lord Whitty said? He was asked a question by the interviewer in which he started off that Lord Whitty was remarkably candid and then she concluded, after some observations, by asking "Were you misled?". "I feel at times we were misled" said Lord Whitty "I would say we were given a story at the optimistic end of the scale when there was a range of outcomes". Mr Addison: I guess Lord Whitty must have been referring to the time that he was in the Department. He is probably referring there quite specifically therefore not to the level two validation progress, but the mapping issues which were very live at the time. I do not want to comment on whether Lord Whitty misled the viewers or whether he was misled in those terms. I have tried to be very clear that there is a real question to be asked. Even if one accepts that the fundamental causes of this difficulty were about the overall ambition of the programme there is a real question to be asked about why it did not become clearer earlier that there was a set of difficulties around which were going to compromise the target. There are reasons for that which I have already given, but just to repeat them very briefly: one is that the number of things the RPA had to attend to at once meant that it did not actually, as things turned out, focus on the one key indicator that proved to be the most important. Second, it had a model which encouraged the RPA thinking to be less concerned about slow rates of progress than the outside world and therefore they did, as a result of that, err on the optimistic end of the range of forecasts. In that sense, probably Lord Whitty is right, but there is a reason for that and one of the reasons for that was the nature of the model that was being used. Q683 James Duddridge: What lessons have been learned in terms of information flows between agencies within core Defra and then ministers to make sure there is a more open, transparent, probed and validated information flow in order that ministers can get a grip on what is going on in the agencies to avoid similar problems in other Defra agencies? Mr Addison: Some of this is work in progress and I am not, I am afraid, absolutely up to speed with it. When I moved on we were trying to set in place some of the following: first of all a strengthened management information system that captured the information we needed to manage the process better; second, a joint team that would involve both RPA staff and Defra staff working together to ensure that we had a common understanding of everything that was going on around the SPS. We were also seeking to strengthen the communications more generally between staff and RPA senior management. It did seem to me when I arrived that everybody, the top team in particular, who had been working extremely hard like the staff, had been focused on trying to sort their own issues out and maybe needed to work first of all more closely together as a corporate body and also to spend more time listening to frontline concerns rather than letting them come up in the normal way through the management chain. Steps were being taken to put some of those changes into place as well. There were communication issues. I should not put them in the decisive box of things, but they were things that needed to be strengthened or improved and I very much hope that those are happening. I am pretty sure they will be. Q684 James Duddridge: From your time as acting permanent secretary, are there any other agencies and lines of communication and key performance indicators that you would express concern about and that are not working in the way that the RPA did not work? Mr Addison: In general no. The RPA was in a pretty unique position with the introduction of a new scheme to deliver payments to customers. The area which is slightly similar, which was of course affected to some extent by the SPS and in turn affected it, was the Rural Development Service and the roll-out of the entry level scheme and countryside stewardship. There was some read-across there and I am quite sure that some of the lessons that have emerged from the SPS saga will be being factored into that by the Department. No; the answer to that is no. Q685 Chairman: We were just trying to probe this question about why it was not picked up earlier that problems were occurring. For example, in the Defra Management Board summary that was helpfully published in public of a meeting held on 27 January 2005, the first item on the agenda is headed "Implementation of CAP Reform" and Simon Brye of the Rural Payments Agency came along and talked about how CAP reform was being implemented as part of the RPA change programme. One of the points he made at the time was that the programme was on red, primarily because of issues around testing which were being actively addressed. He set out the importance of working closely with the supplier and other interested parties and in having a single team for complete testing of the IT system. He went on to make other comments. I suppose that raises the question with me of the Office of Government Commerce who did conduct a series of gateway reviews into the programme. As I understand it, those comments would have reflected some red lights as a result of that review process. We have talked about outside or independent assessment. Can you give us some commentary on how effective this gateway review process was in flagging up failures in the system? Lord Whitty was probed on the Radio 4 programme File on 4 which dealt with this and he was probed about the number of red lights and the fact that these red lights seemed to remain on for quite some considerable time and therefore issues were not being resolved. The Committee has not had the privilege of seeing these gateway reviews yet; we are promised that we might have sight of them but we have not seen any of it yet. Could you just help us to understand where the red lights came on and what happened? Mr Addison: Yes. I shall speak from memory which may not be perfect and you will be able to check when you see the reviews if they are coming your way. The programme was green until gateway three. There was then a series of gateway four reviews which came up with reds and those reds were always related to particular issues rather than just being generally red. My recollection is that on each of those issues steps were taken to sort them out and move on. A red gateway review does not mean stop the whole programme and abandon ship. It means there are things which need immediate attention. Q686 Chairman: May I just be clear? Is the term "gateway" a state-of-the-art piece of language to say that there are certain key points at which you review? You talked about the roll-out of different parts of the computer software and I presume somebody at the beginning of the project laid down the critical path and said here is a key point so that is gateway one and so on. Mr Addison: Exactly. Q687 Chairman: Just for the record, so we understand, what was gateway three, what was the key moment? Mr Addison: I am afraid I shall have to refresh my memory. Q688 Chairman: Please do that and, again, I appreciate it is some time since you saw this information and if it is not possible for you to answer definitively, we understand. However, it would just be helpful to understand what represents each gateway. Mr Addison: I can give you a very quick summary from here, but I am sure you will need to look at this in more detail. There are now gateway zeros which are at the very early stages of project formation and are called a strategic assessment, but it is the kind of "Should this project even get off the starting block?". Gateway one is business justification, the business case. Gateway two is the procurement strategy and the gateways are designed essentially around system and IT procurement exercises of one sort or another. They can be used for other things, but that is what they are essentially designed for. Gateway two is the procurement strategy. Gateway three is the investment decision, in other words, are you at the point where you can press the button with your supplier? Gateway four is readiness for service, in other words, are you actually at the point where you can press the button for delivery? Gateway five is the post programme review, the evaluation in other words. Q689 Sir Peter Soulsby: Are you able to tell us roughly what the timetable was for those particular gateways for this particular project, particularly the later ones we were just referring to? Mr Addison: What happened around gateway four, the readiness for service, was that a sequence of gateway four reviews was undertaken - 4a, 4b and 4c to my knowledge. Q690 Chairman: Do you know when those began? Mr Addison: They were all related to the release of individual components of the software. The most recent one was 4c - 4d was underway when I was there -in February 2006 and had just been completed when the announcement was made that the target was not going to be hit and 4d was the final release of software for 2006. So the gateway fours were about the fitness for purpose of software that was dropping into the main RITA system. Interestingly 4c, although there was a series of reds as you rightly say around 4a and 4b, got an amber. So 4c in February was rated at amber. Sir Peter Soulsby: It is very difficult for us as members of the Committee without actually having these gateway reports in front of us. Chairman: It is indeed. Sir Peter Soulsby: May I just re-emphasise the point which has already been made that we do need those papers. Q691 Chairman: Absolutely and I can understand that, particularly as they have already been commented on by radio programmes which seem to have rather more knowledge about these matters than we do. I just hope that eventually they will filter their way through to us in some way, shape or form. Just one or two more points of detail before we conclude. When you arrived at the RPA, who came along and said "Oh, Mr Addison we're so glad to see you. Here are the things you can do to speed it up"? McNeill by that time had gone, so who came along with "This is what we have been waiting to do, please help us"? Somebody must have been there with the solution. Who was that? Mr Addison: The morale of the frontline staff was surprisingly high when I arrived; I expected that, given the pressure they had been under and some of the calls they were taking, that their morale would have been knocked back. In fact their morale was remarkably high in the circumstances. They had had plenty of ideas about how things might be improved and the management team themselves collectively and individually also had a whole range of ideas as to how, in particular, the blockage that had emerged and taken people by surprise in mid February might be tackled. I found a real willingness and appetite at every level to think about ways of doing the job better. Q692 Chairman: When we had the representatives of the PCS Union in to see us, they indicated that on a number of occasions they had raised issues with RPA management which, with the benefit of hindsight, we can see they had spotted were starting to cause problems. I suppose it made us wonder just how seriously the input of the management was being taken. There are indications that there are people who have been on the inside of this system who were only too happy to comment internally about problems, but you do not exactly get the impression that they were being listened to and responded to. That may be a totally false conclusion I reach, but if you have people who are at the front end saying to this Committee "Look, these are some of the problems" and they were doing it upstream of the kind of difficulties you came and helped to sort out, you do wonder how much listening was going on to the people who were actually trying to deliver the service. Mr Addison: I agree that the communication between the front line and the management team, and by that I mean listening rather than just words, did need some strengthening and improvement and that happened and is happening. The reason for that was that the volume of activity and work and pressure at every level was such that the organisation was finding it pretty hard to find the space and time to do some of the things it should have been doing. I think that is true. Q693 Chairman: Let me just ask you about this volume thing because it keeps coming up. Again, your Department contains some of the most experienced people when it comes to analysing agricultural activity in England and when this policy was being determined at EU level, the fact was evident that new forms of land were going to come into payment which previously had not been allowed for. Why did it seem to take everybody by surprise? When Accenture came to see us, they said that the volume of customers was being increased from 90,000 to 120,000 - I think that was the figure quoted. In other words, Accenture were obviously given a piece of information from somebody saying there are going to be more customers under the new system. The second fact seems to be that if you look at the National Farmers' Union, their horticulturalists campaigned very successfully for a new series of areas of land to be part of the single farm payment scheme. So anybody that knew something about it could have made some estimate because they would know roughly speaking what area of land was down to horticulture and to fruit and so on. Yet somehow the volume argument seems to have taken everybody by surprise. Given Defra's expertise in these matters, why was it such a surprise? Why did somebody not do some estimating about the kinds of demand, particularly when the definition was finally agreed as to the type of land in total which could have come in, which then opened the door to the sort of pony-paddock-type small-scale land holdings which may be alien to United Kingdom agriculture, but which are typical in continental Europe. Bearing in mind that officials would have been in management groups in the Commission, working through all of this, surely there was a growing awareness of what was coming down the track much earlier than appears to have been publicly acknowledged. Mr Addison: The issue was not so much the number of new customers and the pony paddocks. I think that was programmed in, as Accenture may have said. The expansion of the customer base to the 120,000 was not a surprise, certainly it did not take the Department by surprise; it was not a surprise. What surprised the RPA was the volume of changes to individual parcels of land alongside the number of new customers. It was the combination of those two things. I cannot give you a figure, but I seem to remember the rural land register increased the number of parcels by something like 400,000 up to 2.1 or 2.2 million parcels now, so it was a bit of an expansion in that respect. Q694 Chairman: Did nobody ever go out to do a little check? It seems to me amazing that, if you have a policy which is agreed, which brings an opportunity to gain revenue from parcels of land which previously had not been incorporated, so somebody realises that paddocks and woodland areas in farms which may have been dealt with by other mechanisms score under the new system so they bring it in, somebody did not go to take a small parcel, say a county, and just say "Okay, we have our new maps, we've looked at all of this, let's just do a bit of calculating and see what kind of grossing up we might expect". You had the base of the number of fields under IACS. You had that, you knew where you were coming from, if you had just taken a cross-section of farms and said "Right, given the new regulation, what new bits of land on this cross-section of farms have come in?" you could have got some idea of the order of magnitude. What I find odd is that nobody seems to have done that. Mr Addison: That was the point you raised earlier and I cannot help you with the extent to which it happened and why it did not. I would just comment that it seems like a very sensible thing to have done to get a handle on the scale of the issues which were likely to come back at the RPA. Whether it would have in total overall speeded up the resolution of those problems is another question. I agree it would have made the process more manageable and more predictable. Q695 Chairman: But you were hampered by the fact, as I understand it, your data input was to have been done by an optical character reading system which did not work. Is that right? Mr Addison: Yes, that is my understanding. Q696 Chairman: That is why the costs then went up because you had to employ more people to input the data manually. Mr Addison: That kind of sequence of events and the errors which may arise and the fact that the data is therefore not as clean as you want it to be all have knock-on effects through the system and that was one example. There were other examples where, because of time pressures, it was not possible for the RITA system to do as much as it should have done. You then introduce these work-arounds you have at the moment: the tasks are allocated by the RPA intranet, a system called IRIS and the actual processing is done on RITA. This means the two have to talk to each other and they talk to each other both through the individual operator and through the system. That is a clunky process. Q697 David Taylor: It did not help, did it, that you had to depend for a lot of this bulk processing on semi-trained agency staff on little more than national minimum wage because a lot of your key people had been made redundant? That was not a boost to productivity or success, was it? Mr Addison: It is hard to tell. It is hard to know how the old experienced hands would have dealt with the new system. I should say that in my visits around the offices and talking to the staff and meeting both the people who have been in the RPA for some time, the permanent staff, who are now in a minority overall, and the agency staff and the fixed-term appointees and the casuals, there are no differences between their enthusiasm to do the job and the expertise and advice they have to offer. They have been an asset as well as essential in order to get the job done. David Taylor: It is worth repeating yet again for the record - and I think Roger Williams would agree - that no-one, least of all me, is disputing the huge amount of effort and endeavour and tolerance that people to whom we talked, certainly at the front line and the middle level, put in at the RPA. I am full of admiration for them; do not misunderstand me at all. It would just have been helpful if the change programme had not had such a damaging effect on the people you had. Q698 Lynne Jones: When we saw Johnston McNeill previously he told us that he had regular bilateral meetings with Sir Brian Bender, that Sir Brian chaired the board meetings at least once a month, that the director of finance was present and you were there at those meetings, that there were meetings with Accenture and Sir Brian Bender. He concluded by saying that they had very, very high level consideration of pressures upon the organisation to deliver this and the cost implications. Do you agree with that? Mr Addison: Absolutely. Q699 Lynne Jones: Can you remember from your experience what you would say were the two or three most important pressures which were reported to you that they were struggling with? Mr Addison: In the period I was sitting around the Ownership Board table there were certainly issues about the successful deployment first time round of some of the RITA components, the Accenture components. As has been said to you before, some of those did not work properly first time round and they needed to be worked on and that ate into the timetable for the whole programme. That was an issue. It was that issue which prompted the direct engagement between Sir Brian Bender and the very senior people in Accenture and those meetings proved to be very productive as a way of responding to those concerns. That was one factor. Remember that some of the other factors that the ownership board and others would have been concerned with were the old schemes and systems. Until 2005-06 the RPA was still delivering the old schemes. There were plenty of issues around the time limits of payments, the extent to which customers were happy with the service they were getting, which we were quite focused on. They were the subject of targets that the RPA had to meet in the agency plan which was agreed with ministers and the Department. Quite a few non-SPS issues were being discussed in those fora as well. Q700 Lynne Jones: In terms of the single payment scheme, what would you say were the most important issues? If they were raised with you on a regular basis, one would have expected that by the time Lord Bach and the other people who appeared before us and were confident that they were going to achieve the payments these problems would have been ironed out. Mr Addison: The issues more recently, for instance when I was the acting permanent secretary for a month in October last year, the subjects of the discussion with the RPA and indeed with Lord Bach, were around the prospects of hitting the end-February starting of payments target, whether there was a contingency plan which would work if that were not successful, how long it would take to tee-up, the extent to which the Commission regulations might bite on what contingency we could employ and what we could not employ. All of the discussions were around the confidence we could have in the target and fallbacks and contingencies in the event that was not deliverable. As others have told you, up until mid March the RPA advice was that the targets were deliverable. Q701 Lynne Jones: As far as you were concerned the problems and pressures they were drawing to your attention during those meetings were being resolved or had been resolved when in fact they had not. Mr Addison: The Department certainly - and the RPA felt this - was trying to be as helpful as it could in ensuring that all of the issues which surfaced and were raised were resolved. For instance, when there were discussions to be had with the European Commission about requirements which came out of the blue in October about the way in which the payments should be calculated, the Department was extremely helpful in saying "Let us see whether we can dissuade the Commission from having this as a requirement". There was very good dialogue and debate about ways of trying to ensure, in the jargon, that the programme was de-risked. Q702 Lynne Jones: If everybody was being frank about what the problems were, why is Lord Whitty saying that the reports were too optimistic, if you were having these full and frank discussions and if the issues were being dealt with as they were being raised? Mr Addison: I think Lord Whitty is referring to a different point in the cycle and I do not want to comment on what Lord Whitty said because I do not know exactly what he was referring to. All I can talk about is the period when I was very directly involved with those discussions. I can say that the problems as RPA saw them were being tackled vigorously both within the RPA and, when the Department could help, by the Department. I agree with you that there remains this point about why it was that the failure to deliver only became clear late in the day. I have tried to explain some of the reasons why I think that may be the case. I am absolutely sure that things were not being deliberately concealed. Q703 Chairman: Hence the fact that Lord Bach could come and lambast this Committee in quite vigorous terms and only about six weeks later was faced with the ground opening from underneath his feet in a big way. I do not know whether you had a chance to see the evidence that we took from Accenture. Can you just clarify that? Mr Addison: I did see it. Q704 Chairman: Did you agree with their assessment of the work they had done? Mr Addison: Are you thinking in particular that they were proud of what they had achieved and that the system was working? Q705 Chairman: The message from Accenture was that they did what they were asked, they delivered it on time, it worked and if there are any problems "Please do not look here". Mr Addison: That is not exactly what they said, but I understand the point. My view is that the IT is working. Tasks are being closed down, claims are being validated, records are being kept and payments are reaching farmers. All of that is happening too slowly and too late, but the system is working. In that sense I should say that Accenture is absolutely right. I think they were making the point because there is a sense in which people were saying this was another IT failure or cock-up or whatever. I think they are right to say - and I agree with them - that that is not the case in this case, that it is a much more complex set of issues. I do think the fact that some of the releases took longer than planned to stabilise and be ramped up to deal with capacity did eat into the total time available for the programme, because you have a fixed end point. That was a factor, alongside a very wide range of other factors, which all conspired to make the total amount of work that needed to be done too great for the time that was available. In that sense Accenture, like all the rest of us, all those who were involved in this programme, have some responsibilities to account for. In terms of their basic analysis that the system is doing what they were asked to make it do, that is right. Q706 David Taylor: But surely they had a professional obligation to point out some of the serious flaws that were present in the specification which you and colleagues were pressing on them or had accepted. They had more of a responsibility than just saying "That's what you wanted mate, away you go". There were clearly serious flaws there. This is not hindsight. Mr Addison: All I can say is that when I arrived in the RPA in mid March, one of the first groups of people I spoke to was Accenture; they were keen to speak to me and I was keen to speak to them. They were very willing to offer help and advice in ways which did not seem to me to be fundamentally constrained by a very narrow interpretation of the contract. Q707 Lynne Jones: When she spoke to the House on 27 March Mrs Beckett said that the systems were not remotely customer focused. Do you agree with that? How could we get to a situation where a new system was not remotely customer focused given all these high level discussions about it? Mr Addison: The fact that the system as it worked is not customer focused is beyond doubt. You have given me the example of the map. There are a few but very few customers who think they have got a good service. Once the difficulties with the whole system working as planned became clear, it proved to be an immensely difficult system for customers to understand and deal with, where you had tasks being allocated to different offices without regard to claimant, so requests and letters could come from different offices without a co-ordinated approach being in place. That was extremely difficult for customers to understand or deal with and it was not the system over which any of us wanted to preside. That was when it began to get into difficulties. I understand that there are plenty of task-based systems out there in other fields which work perfectly well. Once it got into difficulty and began to work too slowly and some of the discrepancies between the claim and the land register became clear, it became a very, very unfriendly system to use. I think Mrs Beckett was absolutely right. Q708 Lynne Jones: Why were you not aware of this when you had all these meetings? Mr Addison: We were aware of the difficulties with the land register. We were obviously aware of customer anxieties. We were also of the view, given the advice we were getting from the RPA, that the payments would be made to the target date. It only became clear that was not the case in mid March. Q709 David Taylor: But you were not asking the right questions of the RPA, were you? You were accepting blithe reassurances too readily. Mr Addison: Certainly I agree that both the RPA and ourselves, given what we now know, were not asking the right questions. It is easy to say that after the event, but looking back I agree with you. Q710 Chairman: It is a pretty large condemnation of the RPA change programme, which was agreed in 2003, that here we are in March 2006, roughly two and a half years on from the agreement to that programme, and David Hunter is now carrying out what looks like a root and branch fundamental review of what the RPA is about. Bearing in mind the change programme was designed to reconfigure, improve, make more efficient, save money, refocus the RPA, enable it to deal with the new single farm payment, to be going through the whole process all over again after such a short period does raise some very fundamental questions as to the nature of the management decisions which established the RPA in its current form in the first place, does it not? Mr Addison: For me it raises a rather different issue. The issue that it raises is more a Defra-wide issue. It is: what is the RPA's place in the wider family of organisations that constitute Defra as a whole. Set the SPS to one side for a moment. If one looks at the other responsibilities the RPA has accumulated over the last few years, the responsibility for instance for the livestock side, all of the animal health and livestock tracing scheme, livestock register, if one looks at the work they now do on behalf of the wider Department in relation to inspection and enforcement, if one looks at the work the RPA do, or it was planned they do and they are currently doing in terms of cross-compliance coordination, there is a variety of functions which the RPA, because it is a very important Defra delivery body, has accumulated over the last few years. What the Department is taking this opportunity to ask itself, amongst other things - and of course there are other issues here including the way the RPA has handled the SPS - is where the RPA should fit in the wider Defra scheme of things and what kinds of cross-departmental responsibility it should assume, if any, beyond the payment agency job. That is an important question to be asked. Chairman: That might be a focus for a future inquiry by the Committee, but for the moment we have plenty to digest from the very helpful and indeed straightforward answers that you have given us to a wide range of questions. May I reiterate my personal thanks and thanks on behalf of the Committee for the fact that, having now ceased to have direct management responsibility for any of this, you have been kind enough to come back and give us the benefit of your experience? We have learned a lot from what you have had to say and for that I am most grateful. May I just ask as a postscript what you are intending to do now? Are you going on a long holiday to get away from all of this or do you have other mouth-watering activities in mind? Q711 David Taylor: You are not joining the board of Accenture, are you? Mr Addison: Not as far as I know. The first thing I did was take a week's holiday in Greece with Lucy my wife and hit the coldest spell that Greece has had for a while whilst the UK had the hottest. What I am hoping to do next is to walk the Wessex Ridgeway and I hope that will keep me busy. Then in August I hope to begin thinking about assembling a new set of activities to keep me busy. I have not made much progress with that yet. Chairman: We shall make certain that Wessex farmers do not quite know when you are coming just in case they say "There's the man". Thank you very much indeed. |