UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 693-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

environment, food and rural affairs committee

 

 

the departmental annual report 2005

 

 

Wednesday 16 November 2005

MS HELEN GHOSH, MR BILL STOW and MR ANDREW BURCHELL

Evidence heard in Public Questions 1 - 98

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 16 November 2005

Members present

Mr Michael Jack, in the Chair

Mr David Drew

James Duddridge

Patrick Hall

Daniel Kawczynski

David Lepper

Mrs Madeleine Moon

Mr Jamie Reed

Sir Peter Soulsby

Mr Roger Williams

________________

Memorandum submitted by Department for Environment, Food and Rural Affairs

 

Examination of Witnesses

 

Witnesses: Ms Helen Ghosh, Permanent Secretary, Mr Bill Stow, Director-General, Environment, and Mr Andrew Burchell, Chief Operating Officer, Department for Environment, Food and Rural Affairs, examined.

Q1 Chairman: Good afternoon, ladies and gentlemen. Welcome to our annual inquiry into the Defra Departmental Report, in this case the Report for 2005, and we give a special welcome to Helen Ghosh, the new Permanent Secretary of the Department. I think, in my case, you are the fourth holder of the office that I have dealt with, in one way or another, but nonetheless you are very welcome to your new post and, as always, we hope that you will be very happy in the Department. You are supported today by Bill Stow, Director-General of Environment, and Andrew Burchell, the Chief Operating Officer. I gather you want to say a few words by way of introduction before we subject you to our questions, is that right? Perhaps you would like to open our proceedings?

Ms Ghosh: Thank you very much, Chairman. First of all, I would like to express my gratitude for the fact that, since this is only my day ten in the Department, I understand in anticipation you are going to allow me a bit more flexibility to turn to my colleagues for the answers to your questions. Just to say, in introduction, a little bit about my approach to this job and the impressions I have had in the first ten days. First of all, I am absolutely delighted to have come to Defra, not only because of the importance of strategic challenges which the Department has but also because of the programme that is going on within the Department for reform and improvement which is well under way. Looking back on where the Department has come from since 2001, I think it is a real success story and I would like to pay tribute particularly to Brian Bender, my predecessor, and of course the Secretary of State, for where it is today and my main aim will be to build on that for the future. I have spent my first ten days getting out and about, getting to know the business, and I think getting to know the business will be very much my priority focus for the next few weeks and months. Not only have I been visiting policy divisions in the Defra core and learning, I hope, a reasonable amount about the policy side of the Department, also I have already visited three areas of the Defra family. Yesterday I was at Poole, at the Marine Fisheries Agency. I went to the Rural Payments Agency on my second day and I have visited the State Veterinary Service at Chelmsford, so I have begun to introduce myself to some of the delivery challenges we have, which I am sure we will come back to later on. I think my abiding impression, not only when I was applying for the job and reading the Five Year Strategy but also reinforced through my first ten days, is the key challenge we have as a Department, which is delivering our strategic objectives when we have what are effectively rather rubbery levers to do so. Again I know this is something that the Committee is very interested in. I see my role as building the capacity of the Department to achieve its objectives through the kind of influencing, negotiation and networking it has to use. It does not have direct power over many of either the deliveries or the people who can help us achieve our objectives. Four areas I think I want to focus on. One is, deriving from that, ensuring that we build the best possible relationships, not only within our own Defra family but more widely within Whitehall, within the EU and the other, in many cases, international organisations on which we rely to achieve our objectives. I think key to effective influencing across our stakeholders is having absolutely first-class staff within the Department, identifying talent, developing the skills we need in the Department, particularly using the Professional Skills for Government agenda. To take an example, in the forthcoming energy review, and indeed the review currently on climate change, we need to have absolutely first-class scientists, policy-makers, economists, to ensure that we are punching at our weight in Whitehall and I think that issue of skills and developing talent is my second priority. I know that lots of good stuff has gone on in the Department on leadership over the past few years. I think we need to take that perhaps a step further and identify the different kinds of change we have to lead, some of it is very quick, it is project, it is tomorrow, it is a few months and some of it is over what one might describe as generations of time. To identify what kind of change we are dealing with, what kind of influencing we need to do and what kind of leadership we need is fantastically important. Using the various strategies, and again I think this is something we are going to discuss later, the different nature of the change we have to achieve I think is reflected in the number of strategies we have set out to achieve that. The last thing I want to focus on is the issue of customers, do we really have a customer focus, who are our customers, what do our customers want, how do we influence the behaviour of our customers, and I know that some preliminary work has been done on that. I know, for example, of course, we have an excellent evidence-based programme on the scientific and economic side. Perhaps we need to do a bit more on social research, on that kind of behaviour, so that we can really engage with customers and get them to do what we want them to do to achieve our overall objectives. There is lots of good news. When I joined the Department, as I say, lots of excellent stuff going on in terms of the departmental reform programme and improving our skills around leadership and management. I was delighted that I have inherited a Department where a lot of the indicators in terms of staff survey are good. I think 60 per cent of people are proud to work for the Department; it would be great if that were 100 but that may be unachievable. Lots of people willing to challenge, which again I think is an excellent and healthy sign, 61 per cent of our staff feel they can challenge the way we do things and if we are going to get continuous improvement we need plenty of our staff challenging the way we do things. I think there are still some issues for us, some challenges, around diversity, which again I am sure we will come on to, and management, management of performance, and some behavioural issues. In terms of immediate challenges, we have, of course, delivery challenges, which I am sure we will discuss, single payment, environmental schemes. We have got the very high profile policy issues which we are in the middle of, climate change, trade, the energy review coming up next year, and then the most immediate, animal health issues, that you were talking to Ben Bradshaw about yesterday, so a big agenda. I just want to end by saying that certainly I see this Committee as one of the key partners and stakeholders in what we achieve and look forward to working with you over the coming months and years.

Q2 Chairman: Very good. You have covered a lot of ground in ten days of being in the post and I congratulate you on your bravery in coming before us after such a short time in office. I was very pleased to hear that you had applied for the job, that you were not drafted in and told "Get down to Defra," but you thought it was a good place to go to, so that is a very good, positive start. To ask you a couple of points of detail. You laid emphasis, on a number of occasions in your remarks, to the climate change review and also the energy review. Can you help the Committee by giving us some indication of the likely timings for the conclusions of those two exercises?

Ms Ghosh: I know you were exploring these issues fairly recently with the Secretary of State. As you know, and this is discussed in the press too, the climate change review is currently under way and debates are going on within Government on that. On the energy review, the Prime Minister I think announced the principle of a review at the Party Conference, details of the review, the terms of reference, are still to emerge. I do not know whether Bill has anything to add on that.

Mr Stow: On the Climate Change Programme review, Mrs Beckett gave you the current position, I think. As Helen says, we are engaged with other government departments in finalising the package. The package may not emerge now until December, or perhaps January, and, as she told you, that depends a bit on her own movements. On the energy review, the formal announcement of that is likely to follow the Climate Change Programme review, but the timing of the review will be then to take it forward in the course of next year.

Q3 Chairman: In the course of next year; that is very helpful. You also mentioned in your opening comments matters connected with the structure and the restructure of the Department. Do you feel, from the time you have had in the Department, that some of the silos that were there when Defra was first created have been broken down and there is now a shared ethos and approach across the whole of the Department?

Ms Ghosh: I think we are a long way to that objective, but perhaps we need to do a bit more tweaking. When I go round talking to staff at senior levels I think undoubtedly it is achieved and I know, for example, that Brian Bender had a very positive policy to make sure that at the SCS level and at key Grade 7 levels there is plenty of interchange across the Department and the figures support that. When I talk to more junior staff and ask that very question, the anecdotal response one sometimes gets is, "Well, you know, you can still tell that some people are MAFF people and some people are DETR people." I think three things will help us with this. I think the merger of Ursula Brennan's and Andrew Lebrecht's Director-Generalships early in April-ish next year, bringing together the rural affairs and natural environment and the sustainable farming and food side into a single DG will help enormously to make people think holistically. I think we are already beginning to put in place what are effectively matrix structures. For example, there is a cross-departmental virtual team working on our response to the Kate Barker review on housing. I was talking yesterday, or the day before, to some of Andrew's team about how they are pulling together, for example, the impact of agricultural activity on the wider environment, so even within what looks like silos we are encouraging people to think more widely. I think there is more to be done. I think the policy review that Ursula was leading will enable us really to think about whether we want a step change, without throwing the organisation up in the air and making it land differently, and how we do virtual and matrix activity and really join up.

Q4 Chairman: You mentioned the customers. I got an anguished letter this week from the Tenant Farmers Association, crying out for the appointment of what they described as a Minister of Agriculture. In other words, what they are saying is "We think we're being lost in this blending together of the different aspects of the Department." In the inevitability of bringing together environment and land use, for example, with the sustainability and environmental agenda, how are you going to communicate to the different communities of interest for which Defra has a responsibility that they remain important focuses for the Department's work?

Ms Ghosh: I think we can reassure people, in the sense that, as you know much better than I, we have in fact very good networks and structures for communication with what I might regard as our traditional customers, the farming group, for example. I was very impressed on day two, I think, I sat in on one of Don Curry's Implementation Group meetings, which obviously has been enormously powerful, both in sending a message to the farming community about how we are trying to support them in moving to a new market-based approach, sustainable farming policy, and they will be thinking about how we carry that forward in the future. My current perception, in many ways, is that we are structured more to face our traditional customers than we are other customers. I have heard from the Department the criticism that we spend a great deal of time with traditional, what we might call, old MAFF customers and less time thinking about, for example, the recreational users of the countryside, and less time with the big membership organisations, like RSPB and National Trust. I think the key, and I could have said more in my introductory remarks, is this communications one. It is about persuading the farming community that actually their interests and the wider sustainability of the farming, food and rural economy policy in fact is in all our interests, so I think first-rate communications is the key there.

Q5 Mr Drew: When the new Ministry was formed, there was a dispute between those civil servants who were MAFF compared with DETR. Have all those disputes been completely settled now, because there were issues to do with differential payments, and some of us found that quite difficult to understand, in the gradings of the Civil Service, but has all that been taken on and overcome?

Ms Ghosh: I will ask Andrew to pick up the details, which he understands more than I do. In terms of the core Department, yes, that is the case. I think we have now unwound all the differences in terms of the different notably pay levels on which the ex-DETR and ex-MAFF staff joined into the new Department. As you will be aware, there is an ongoing issue, which in a sense is the sort of unravelling of that when we move into our new policy and delivery structures. The outstanding issue now is the issue of coherence around the wider Defra family and that is an area where the ongoing pay settlements, which will be agreed and decided upon in the coming six months or so, will make a difference to the relationship between the pay and conditions in some of our family and in the core Defra. In terms of the core Defra, I think that is settled.

Mr Burchell: Yes. In relation to the pay differentials that were referred to, in 2002 we secured Treasury funding for a four-year, multi-year pay deal, which effectively has brought about convergence between those two groups, and this year is the last year of that deal. Helen referred to the fact that there has been quite a lot of movement within the Department. If you look at the composition of directorates-general at the moment, there has been a lot of cross-movement within DGs, and Bill may want to say something about the experience of the Environment group, where a large proportion of his staff are either from the former directorates within MAFF or from outside. Before Brian left, for example, when he used to ask people if they were ex-MAFF or ex-DETR, they said, "No, actually we're Defra. I joined to come to Defra." If you look at the amount of new staff over a four-year period and the amount of churn, a lot of those issues which were around in 2001, formed largely from the fact that there were significant pay differentials, have gone.

Mr Stow: More than half of my total team, which is about 800 people, are Defra, they were not part of either of the two parent departments, and that includes me and around half of my Senior Civil Service team, so there has been a lot of movement.

Q6 Mr Drew: Can I follow up with another question which relates directly to that and that is the status now of individual Defra officers, and clearly there are many. Do they all fit with the regional government, in all but name, status or Government Offices in the different regions? This has always been quite difficult, because the old MAFF offices, in particular, did not fit very easily necessarily into the regions of the country. Have they now all been brought under the regional roof, so to speak?

Mr Stow: The answer is yes, within the Government Offices. Each Government Office now is organised in slightly different ways but, broadly speaking, there is a Defra team within each Government Office dealing with most of our business. Some will deal also with planning, so they are not our creatures and they are not necessarily our people but they are working on our issues in each Government Office, and they are called variously Rural Director, or Director for Sustainable Development, in each of the Government Offices.

Mr Burchell: In relation to our creations around animal health and the Rural Development Service, they have now gone to Government Offices. The one exception would be the Environment Agency, which is organised on a river catchment basis. That would be the one part of Defra which probably does not map onto the Government Office regional core, for those natural resource reasons.

Ms Ghosh: I think also the MFA, just because I happen to have been there yesterday, just north and south, that is for genuine delivery reasons rather than anything else.

Q7 Daniel Kawczynski: I would like to welcome you to this meeting. I was gently admonished by Mrs Beckett for referring to her as the Secretary of State for Agriculture. I wish she were, because I feel very passionately that there should be a Secretary of State for Agriculture because I represent a very agricultural, rural community, in Shrewsbury. As the Permanent Secretary, do you have any particular interests within this vast Department that you represent? What are your interests in farming and how do you juggle that? I would like to probe a little further on what the Chairman said on that point?

Ms Ghosh: I should say, primarily, of course, what I have to focus on is what ministers want me to focus on, in terms of policy issues, and I am here, among other things, to support the Secretary of State in what she wants to do, so her priorities are my priorities. In a personal sense, I do not know whether you have seen my CV, I started in the old Department of the Environment and spent an immensely enjoyable time. I did two jobs there. One was, very much Bill's side, on the environmental side of that Department and then, in a later job, local environmental issues. The areas of the Department's activity, in a sense, which I know most about are undoubtedly Bill's side of the Department, and actually local environment is yours as well, I guess, those issues particularly around local urban regeneration, which are picked up in some of the, what are called, Better Environmental Communities type programmes. More personally than that, for example, I am a lifetime member of the National Trust. I live in Oxfordshire, which although I live in the City of Oxford is very much an agricultural county, though taken over by the celebrities in recent years. I have two children. I try to lead a life which supports the principles of sustainable development, I try to make the children turn off the lights. I do not use an official car to get to work, I cycle to the station and use public transport. I am happy to say that Oxford City Council and Oxfordshire have very good recycling and rubbish collection systems, so we use those to the maximum. The one thing I do not think I can promise the Committee is that I can get my teenage children to turn off the lights, because I work very hard at that. However, one of my first invites was from the Deputy Chairman of the Farming and Wildlife Advisory Group, who has a farm in southern Oxfordshire, she has asked me to come on a farm walk and I am certainly going to take her up on that. What I am hoping to do, in this programme of getting out and about, is get out and about and meet plenty of farmers and learn more about the agricultural side of the Department.

Q8 Chairman: Can I pick you up on just one little thing you said, "My priorities are the Secretary of State's priorities." If you felt that the Secretary of State had got a priority wrong, would you tell her?

Ms Ghosh: Yes. I think that is my job too.

Q9 Chairman: Good. I was just checking that the critical faculty was in full operation. You kindly supplied us with details of the umpteen reports, initiatives, inquiries and other activities which your Department is doing and it illustrates the breadth of activity but the management challenge as to how you keep all these proverbial balls in the air but, as the person at the top of the office, keep an eye on them and make certain that things are progressed. Sometimes you get the impression that, if Defra finds something quite difficult, "Good idea. Let's issue a paper, let's have a consultation, let's park it somewhere for a while." What is your management approach to ensure that all the things you have started will be properly progressed against their stated timetables and the areas of inquiry concluded with a view to developing the Department's policies?

Ms Ghosh: What a lot of that comes back to is, I think, excellent, I am going to use the term, management information, but I am using this in its broadest sense, in terms of ensuring that the Management Board, and the Management Board with ministers, has the tools available to make sure that we are not losing sight of things. Two things I would highlight there, for which I take no credit at all but which the Department has progressed in recent months. First of all, how we keep an eye on projects, the progress of particular, big delivery projects, and ensure, with increasing sophistication, that we can deliver. Secondly, something about which I know very little, except in outline, which is a Balanced Scorecard approach to keeping an eye on our performance and our programme. Here I will turn to Andrew, who knows much more about these two things than I do.

Mr Burchell: Essentially, the Balanced Scorecard is something we discussed before the Committee I think last year and indeed the year before.

Q10 Chairman: Just refresh our collective memory as to what this Balanced Scorecard looks like?

Mr Burchell: Effectively, it has got a front sheet which has four quadrants on it. The first is in terms of the strategic outcomes we are trying to achieve, largely relating to the PSA targets and our SDA target on floods and then supported by further information on the Mission Critical projects. The other quadrants effectively relate to the enablers, a people sectioning, to ensure we have got the right people in the right jobs with the right skills, what our processes are like, are we good at financial management, something you might want to turn to later on in this session, what is our success at influencing other government departments, and so on. Effectively, lying behind that is quite a lot of management information at different levels to see if we can link up the enablers with the outcomes. It is a fairly well-tried tool in the private sector and increasingly in the public sector. Essentially, the idea is to anticipate the problems before they arise.

Chairman: There we are. Our scorecard requires us to achieve the objective of voting by moving ourselves to the Commons.

The Committee suspended from 3.38 pm to 4.01 pm for a division in the House.

Q11 Chairman: Mr Burchell, I think you were entertaining us with a little description of the Balanced Scorecard and I rushed back, salivating at the thought of further explanation on this matter. Would you like to start where you finished and conclude your thoughts?

Mr Burchell: I will try not to disappoint then. There are two things, really. Helen referred to effectively the quality of management information and I referred to a Balanced Scorecard. Just to recap, it has got four quadrants, results, processes, customers, stakeholders, people, knowledge and culture, effectively our results, plus the key enablers. The intention, of course, is to anticipate problems rather than react when they occur, therefore there are links between our key enablers and processes and our results. We can certainly let the Committee have the latest version of the measures because we review the Scorecard every three months in a small group chaired by a member of the Management Board. Then we have a quarterly discussion at the Management Board of the key issues emerging from that. Also we review the results section every six months. The Management Board also has visibility of the performance on our Mission Critical projects and our PSA performance. I think it is important not only to rely on management information but also to recognise that, whilst you posed the question to Helen in terms of how she makes sure that all of these things are delivered, actually it is important for members of the senior leadership team in a department to take personal responsibility for delivering these projects. Each of our Mission Critical projects, PSA targets and the like have senior responsible owners, either members of the Management Board or their directors, and the management information which flows through up to the Management Board is also a means by which we seek to hold the senior responsible owners to account. It is not just about having information it is also the leadership team taking personal responsibility.

Q12 Chairman: That sounds wonderful. Will this piece of information that you are going to send to us also include a little list of the hoped for timetable or deadlines and, under all the strategies that are listed under your list of current strategies, when you expect them to see the light of day?

Ms Ghosh: Certainly. Yes, we will be delighted to do that.

Chairman: What we would like is particularly the original date, just in case by any chance you slip back a bit; we would like to keep track. If you are using the Balanced Scorecard to keep such a close eye on them, we too would like to share in that experience, so we look forward to that information on date and timetable.

Sir Peter Soulsby: I would like to take you to one of the most challenging elements which no doubt features on a scorecard somewhere.

Chairman: Can I just say to you that 'challenging' is the word that we always use when it is difficult and that your predecessor always used when he could not quite give us a straight answer but said it was "challenging," so it is a very important word.

Q13 Sir Peter Soulsby: I certainly chose my words wisely in this context. I was going to take you to the figures of efficiency savings that you have to achieve in the 2004 Spending Review, right at the beginning of the Departmental Report; you identify just over £600 million that they have to achieve overall. The largest element in that is almost half of it which you are anticipating will come from savings from local government. I want to explore that with you, because obviously the Department does not have any direct power over local government so, in those circumstances, how are you sure you can achieve that figure and how are you going to measure it?

Ms Ghosh: Although I had an excellent explanation of this from Bill's team last week, I do not think I could repeat it here, so I am very happy to hand over to Bill.

Mr Stow: Yes, you are right, it is indeed challenging. What makes it more challenging, I think, is to get a handle on, first of all, how we measure these savings, because local government does not necessarily measure them in the same way and other departments are responsible for delivering Gershon efficiency savings which dwarf those expected from waste in local government. Having said that, as a result of the work on the waste strategy, we had already set up our Waste Implementation Programme team, the so-called WIP team, with a lot of people in it from outside Government, from the private sector and from local authorities. Part of their role is to engage directly with local authorities, particularly those which are performing less well, to help them, to help with issues like procurement, and so on, and we have a programme of direct consultancy aid for local authorities which is both to help them meet the Landfill Directive targets and PSA in this area but also, through doing so, to improve their efficiency performance. When we have talked to the Local Government Association about this they see this programme actually as being something of a model for other parts of government. It is quite resource-consuming, of course, to engage with all of the local authorities involved in waste collection and disposal and so we do not, we try to prioritise, as I say, on the worst performers. That is at the heart of how we are trying to deliver the efficiency savings and, so far, it looks as if we are well on track to meet that figure, which I have always found suspiciously precise, of £299 million that we are meant to be delivering in efficiency savings in this area.

Q14 Sir Peter Soulsby: I am still struggling to understand how you will know, or how they will know that you know that you have actually achieved it?

Mr Burchell: Recently we made available to local authorities a measurement tool, which allows them to track expenditure on waste collection management and disposal and adjusting that for things like volumes, changes in contract, and so on, so that actually you can measure, track over time, true efficiencies. That is a web-based tool which we made available earlier this year and that is going to be the main monitoring device. Based on the information we have received to date, efficiency savings so far, certainly last year, in 2004-05, were £52 million.

Q15 Sir Peter Soulsby: I am still struggling a little bit. I am just wondering what this tool looks like.

Ms Ghosh: Could we offer a demonstration?

Mr Burchell: Yes. The easiest thing is to send a copy of the guidance note.

Q16 Chairman: Before we get too hung up with planning how to save money in local authorities and our offices, let me just explore the line that Peter was moving along with you there. You say that you, or local authorities, have identified £52 million. Surely what you are talking about is reducing your expenditure to local authorities, yes?

Mr Burchell: No.

Q17 Chairman: How are you posting £300 million worth of savings if it is not going to be £300 million less that Defra is handing out?

Mr Burchell: Actually Defra does not hand out most of the money to support waste. Effectively, it is part of the Environmental and Cultural Services part of the Revenue Support Grant.

Q18 Chairman: It comes out of your post total, does it not?

Mr Burchell: No, it does not; it comes off ODPM's.

Q19 Chairman: How come you are scoring £300 million if it is not your money?

Mr Burchell: We take the policy lead on waste and ODPM is actually just the revenue support mechanism through the Revenue Support Grant. Therefore, in the Spending Review 2004, the savings which the Treasury are expecting in respect of waste were allocated to us, even though those savings are not part of our departmental expenditure efficiencies.

Ms Ghosh: They have not taken it out of our line for the final year, no.

Q20 Chairman: You cannot have a saving unless money goes from the centre to local government, is that right?

Mr Burchell: The saving is judged against what would have happened if they had not introduced efficiency measures. There is a background growth in expenditure as a result of waste arisings growing by, I think, something around the rate of two to three per cent per annum. Therefore, in the absence of any intervention and efficiency, expenditure would be growing by about that rate. The way in which the savings are measured is against that counterfactual, in terms of what would have happened in the absence of those interventions.

Q21 Chairman: You are slowing down the rate?

Mr Burchell: The rate of growth of spend against what you call in, I suppose it is a saving.

Q22 Chairman: It is a saving on where you would have been?

Mr Burchell: Yes, and the savings which effectively do accrue are recycled back within the local authorities.

Q23 Chairman: What is the timeline breakdown of this £300 million then?

Mr Burchell: It is £52 million in 2004-05, £135 million in 2005-06, £217 million in 2006-07 and £299 million in 2007-08. Those are cumulative figures. The £299 million is a cumulative figure after that four-year period.

Q24 Chairman: Do you reckon you are on track for year one?

Mr Burchell: Yes.

Q25 Chairman: You have got your £52 million and on that reckoning you have got about another £80 million to do next year, so they are going to have to be 50 per cent more efficient in the second year. Is that feasible?

Mr Burchell: I am not sure whether that is the right calculation in terms of the 50 per cent being 50 per cent more efficient than the year before. They need to generate savings.

Q26 Chairman: If you have done £52 million in the first year, to get to £135 million you have got to do another 80. By my maths, that is another 50 per cent up in efficiency?

Mr Burchell: That is a further 50 per cent increase in the savings. That is against an expenditure level, I think, from memory, of about £2.2 billion across England.

Q27 Chairman: I do not want to hog the questioning on this but, okay, however much it is as a proportion, the amount you have got to save, if you like, the global total is roughly of the same order, it still means they are going to have to run harder and harder as the years go by. Is that feasible?

Mr Burchell: Yes. If you look at the profile, and certainly at the time of the Spending Review, and looking at the projections based on our waste model, the interventions which we would be introducing around things like PFI, pilot projects, targeting poor performers, best practice guidance, and so on, the things that Bill referred to, all of those things would deliver that level of saving. The £299 million cumulative is roughly about a five per cent saving over that period.

Chairman: Perhaps you will keep us posted with progress. Peter, do you want to carry on?

Sir Peter Soulsby: Yes. I am still struggling somewhat to understand quite how this works.

Chairman: Ask him why you are still struggling then.

Sir Peter Soulsby: It does strike me that Defra is being set, or has set itself, the target of reducing local government expenditure in an area that Defra does not control and which it can measure only with some difficulty, and perhaps not very precisely at that, and it does seem a rather strange way of doing business.

Q28 Chairman: How did you decide that £300 million was the right number?

Mr Burchell: The time we are spending was based on forecast of spend and an analytical model looking at the impact of different forms of intervention.

Q29 Chairman: What does that mean, an analytical model of different forms of intervention? That does not immediately communicate what it means.

Mr Burchell: Let me try again. It is a model devised by our economists which looked basically at the impact of different types of policies on the level of spend by local authorities in relation to waste management.

Ms Ghosh: In other words, if they did the things that Bill described, against the rising profile, what would be the outcome over that period.

Mr Stow: When we put together this Waste Implementation Programme, where there are quite a number of different elements in it, using new technology, best practice programmes, and so on, when we started out we tried to model what we expected each of those to deliver, as you would hope and expect. Now we are monitoring which of those seem to be working best and which are working less well and so we are able to adjust the model to see, as I said earlier, both how well it is delivering in terms of meeting our landfill targets but also now the efficiency savings.

Chairman: Now, Peter, does that sound any clearer to you?

Q30 Sir Peter Soulsby: Not a lot. I think I would welcome, as has been suggested, some of the background explanation of this. That is probably as far as I can take it today.

Ms Ghosh: We will let you have a more detailed reasoning.

Chairman: Mr Hall, would you like to help us shed some light on this?

Q31 Patrick Hall: I would like to try to understand it a bit more. This target of saving, the £300 million part of the £610 million, is not that actually departmental budget expenditure?

Mr Burchell: It is not part of the departmental expenditure, no.

Q32 Patrick Hall: This is public sector expenditure. This is expenditure, in this case, by local authorities, which if saved would be knocked off their Revenue Support Grant?

Mr Burchell: No. The savings are retained by local authorities to meet pressures essentially within the waste sector.

Q33 Chairman: If I have understood this correctly, you have had a former rate of increase of funding. You have found a way now of decreasing the rate at which that funding is increasing and that happens to come to £300 million?

Mr Burchell: That is correct.

Q34 Patrick Hall: That money is redeployed to develop recycling, etc., more effectively, which is desperately needed in this country. Is that really the rationale?

Mr Burchell: Implicitly, yes.

Q35 Patrick Hall: It can be demonstrated genuinely to be a saving, but also not just a saving, a redeployment to do the job better. Is not that the way it should be presented then?

Mr Burchell: We believe that the measurement tool, which we will let the Committee have a note on, is a way of demonstrating that the saving has arisen. Clearly, it is up to local authorities how they redeploy those savings.

Q36 Patrick Hall: What is the view of local authorities, what is the view of the Local Government Association on this?

Mr Stow: They work very closely with us both on developing the model and on the whole of the Waste Implementation Programme. As I said earlier, in fact they have said to us that they see us as something of a model amongst government departments in the way that we have engaged with local authorities to help them deliver these efficiency savings.

Q37 Patrick Hall: It is not a cut, actually it is redeployment?

Mr Stow: No. The background, as Andrew said, is one where waste arisings continue to increase, so local authorities are having to deal with a rising trend of waste being generated without their budgets rising at the same level.

Q38 Chairman: The bad performers are going to have to work goodness knows how much harder and the good boys will be alright; roughly speaking, is that how it is working?

Mr Stow: It depends what you are measuring here, whether you are measuring performance against recycling targets or performance against efficiency targets.

Q39 Chairman: The inefficient local authorities, faced with a slower rise in their budgets, are going to have to work very hard to deliver, whereas the more efficient authorities will cope within your changed financial ceiling?

Mr Stow: That should be correct, yes.

Chairman: That should be correct; good. Again, it would be very interesting to be kept posted of progress on this gargantuan task.

Q40 James Duddridge: I would like to move to the 2,400 staff cuts that will be required. I am wondering particularly how that will affect staff morale and what pieces of work departments can put in place to keep morale high? You talked of monitoring staff, in your opening remarks, and particularly as 1,600 of those staff are from executive agencies, and presumably it is harder to control an environment and maintain morale, what steps have the Department put in place to keep up that morale?

Ms Ghosh: I think there are a number of things going on, many of which are around communication and some of which are around improving the quality of our leadership and management within the various organisations. In a way, I am picking up the experience of my previous department, Revenue and Customs, where there was much a larger, in some senses, organisational change programme but certainly efficiency challenge. I am not under the illusion that it is easy to sell to staff the idea that we would be reducing numbers, and for many of them, in terms of exactly where they would be working in the future, what the nature of their job will be, uncertainty of that kind is unnerving and tends to undermine staff morale. In terms of the impact of the overall numbers cuts, I think we have sent out very clear messages that, on the whole, we would expect to be able to achieve these by a combination of the natural wastage levels that we have within the organisation and targeted programmes of early retirement, and we have had a lot of success and certainly we are on track for this year in terms of achieving the trajectory of our staff reductions. Further down the track, I suspect there will be issues about some of the natural vacancies, retirements, resignations and moving on to other jobs, not falling in the rights sorts of places. My personal commitment, I think, is to try to engage staff and communicate with staff as clearly as possible about what the future holds for them as early as possible, and that is an absolutely fundamental issue around maintaining their morale. It is the uncertainty, for many of them, that is so undermining. In terms of morale across the organisation, and ten days is not very much, I have been very impressed by the extent to which, going out and meeting people in some of our new agencies, they have found the move to agency status a real boost to morale. In some cases they are still uncertain. As we know, there is some disquiet about pay and those sorts of issues, but actually the creation of agencies, SVS, where I was, and the fishing agency, where I was yesterday, they have seen that kind of move to the sense of a single organisation, a clear mission, some greater independence in terms of management, as something that increases morale. I do not know whether Andrew wants to comment more generally on the reception of the efficiency by staff.

Mr Burchell: I think it is important to say that this is a three-year programme, rather than something you are trying to do very quickly, and I think that allows more sensible planning and communication. Also it allows more time for handling the reductions through natural wastage and redeployment. In the case of the agency staff, which essentially is 1,600 from the Rural Payments Agency, some of that has been anticipated in the past as a result of the change programme in the RPA, which was introduced, I think, in spring 2000, so there has been quite a lot of lead time for this. Within the RPA the mix of staff has changed quite considerably and they have quite a lot of agency staff there doing a lot of the work, and clearly that mitigates, certainly I would not like to pretend that it removes but it mitigates the impact on permanent staff, in terms of redeployment.

Q41 James Duddridge: That is certainly reassuring. I did not realise it was 1,600 from principally one agency; presumably it makes it a lot easier to manage?

Mr Burchell: Yes.

Q42 Patrick Hall: It is 2,400 staff over three years. At the end of that period, what is the annual anticipated ongoing saving?

Mr Burchell: The 1,600 saving from the Rural Payments Agency is roughly about £35 million in running costs, so prorating that it is probably about £50 million a year in staff costs.

Q43 Patrick Hall: They are not paid very much then, are they?

Ms Ghosh: Our staff costs are not actually very high.

Mr Burchell: Most of our expenditure is not on staff, most of it is on programmes, in grants and payments.

Ms Ghosh: Yes, £369 million, is that right, is our paybill, of our £5.5 billion, the total bit of the paybill; quite unlike, say, a department like Revenue and Customs, where most of it is paybill, a minute amount of our spend is paybill. Therefore you would not expect to get large amounts of savings in financial terms.

Q44 Patrick Hall: Is this over and above the £610 million?

Mr Burchell: No. The savings from the Rural Payment Agency change programme and the CAP reforms are part of the £610 million.

Q45 Patrick Hall: Did I hear you say that in order to mitigate the effects of losing core staff, or directly-employed staff I should say, the Agency is employing staff through agencies?

Mr Burchell: Certainly the Rural Payments Agency has got quite a lot of agency staff.

Q46 Patrick Hall: They cost a lot more, of course, so how do you save by doing that?

Mr Burchell: When the savings are calculated, where you could have employed permanent Civil Service staff, when you remove those posts they actually score against the 2,400 reduction and if they are not there then you are not paying for them, so that saves money.

Q47 Patrick Hall: The agency obviously gets paid for it but the individuals probably get paid quite a lot less?

Mr Burchell: In terms of the payments they actually receive, agency staff get paid not dissimilar rates to the people employed permanently but then you have got the margin on top for the agency.

Q48 Patrick Hall: It is the temporary nature of their employment that generates savings?

Mr Burchell: No. What we have been trying to do is, over time, in order to mitigate the impact of reducing the number of posts which could be filled by permanently-employed civil servants, the management of the Rural Payments Agency in particular has chosen to fill those posts with agency staff and that gives them more flexibility over time in terms of reducing the number of employees, because they are only temporary staff.

Ms Ghosh: Needed for a temporary task.

Q49 Chairman: Let us move on. In your opening statement, Permanent Secretary, you indicated to us that you wanted to develop and improve your Department's relationships with other parts of government. One of the things that we expressed in our Report last year was whether, in fact, Defra had sufficient clout actually to be taken seriously by other parts of government. I think, in making that point, we were thinking particularly of the climate change agenda and the question of who was in charge, particularly about the interaction of environmental targets, outputs and things like transport policy and energy policy. What is your ten‑day assessment of where you stand in the clout stakes?

Ms Ghosh: We can never have enough clout, is probably my ultimate objective. If I can just give a little anecdote, before I hand over to Bill, who has much more experience from the front. I was walking back this morning down Whitehall with Nick Stern, who as you know is doing a study on the economic impact of climate change, and he greeted me warmly and said, "I just wanted to say that, in terms of collaboration and the quality of the people that Defra has offered us to work on the climate change project, you stand out across Whitehall in terms of quality and collaboration." I was delighted to hear that because, back to my earlier remarks, I think our clout depends very much on (a) our being out there and engaged, and, secondly, the quality of the people we can supply. I think that is a very good example.

Q50 Chairman: Just before Mr Stow replies, let me go down a path which I have trodden on a number of occasions to give you a specific of what I am getting at. Your Department published, probably three years ago, a glossy little booklet extolling the virtues of biofuels. It quantified the impact on rural employment and really sang the praises, so that if you had landed from the proverbial planet Mars and read the booklet you would have thought, "My gosh, this Government really is switched on to biofuels." When we come to looking at the biofuels industry, we find very little evidence on the ground of anything that would fulfil the policy objectives as laid out in your own Department's publications. When we come to the Treasury, we find even less support, because the whole of the industry tells us that the duty discount is not sufficient to kick-start an industry and you are left wondering, where is the clout, where one department can put out a glossy extending a policy but other parts of Whitehall seem to frustrate it actually in delivering. I say that against a background that within the last few days the Government have made a lot of ballyhoo about saying, "We've got this wonderful idea, inclusion of biofuels in main road fuels as a way of reducing CO₂" as if they had just discovered it. You discovered it a long time ago and so did we, but why has it not happened, where is the clout?

Ms Ghosh: It seems discourteous to say to a person of your ministerial experience that, as you know, there is always a debate within Whitehall about priorities and what we are going to do next, and so on. I guess that part of the explanation for it is we can put out such a proposition but when we come to Treasury colleagues and fiscal issues there may well be other priorities out there, and we are part of the endless juggle that ministers have to perform of where they want to put their money and what their priorities are. Since this is a subject on which undoubtedly Bill will know much more than I, I would like to hand over to him.

Mr Stow: Yes, there are formal mechanisms and, as you will know, we have joint targets on climate change with DTI and DfT and we have joint PSA targets on fuel poverty with DTI and on air quality with DfT. Those in themselves provide a clout for Defra, if you like, of ensuring that other government departments are fully engaged with the important targets that we have. Underpinning those then is a structure of formal monitoring and reporting which enables us to put pressure on those departments to deliver their part of the bargain, if you like. If we look at an area like climate change then also we have the Sustainable Energy Policy Network, which brings together a number of other departments, like ODPM and Treasury, into machinery which is there to deliver the objectives of government which were set out in the Energy White Paper. The Climate Change Programme review is a further, important subset now about where again we are working together with all of the relevant departments to try to get a balanced package for meeting our climate change objectives. In that context, just to answer your point on biofuels, it may be slow-burn but, as you say, we have now had from the Department for Transport the announcement of the Renewable Transport Fuels Obligation, which will save something like a million tonnes of carbon, which is equivalent to taking a million cars off the road. Our influence sometimes may be rather slow, as Helen says, there are plenty of other players and other considerations, but we get there.

Q51 Chairman: I appreciate some of the mechanisms which are involved in the decision-making process, but you talked about shared targets, shared agenda and you made very clear what your own Department's policy objective was, in terms of having a UK biofuels industry. You are quite right, what was contained in the European Directive has now been, if you like, tacitly acknowledged as UK Government policy, but the facts of the matter are that, if your own objective to secure these fuels being produced in the United Kingdom is to come to pass, something has got to happen that is not happening at the moment. You have had three years observing that nothing is happening, bar one plant that produces, what, 400,000 litres of biofuels, something of that order. You have got one plant that is up and running and the rest is a sort of failure of the market to deliver. I think what I am getting at is, it is alright having all of these wonderful, shared objectives but the actual delivery is not a slow-burn it is sedentary, it ain't moving, and I have not heard any real explanation as to what you are going to do to overcome whatever the road-blocks are to moving forward that kind of policy agenda?

Mr Stow: As I said, we have now the announcement of the Renewable Transport Fuels Obligation, which, I agree, is a stronger commitment from government than we have had so far to developing biofuels. I understand that coming along behind the plant that we already have there are more being planned in prospect.

Q52 Chairman: Planned; there are lots of planning applications but nothing on the ground and they are all using waste oils. There is virtually nothing in the pipeline that fulfils your policy in your pamphlet, it is not my idea, this is your policy, about using materials grown in the United Kingdom?

Mr Stow: My understanding is, and I may have colleagues behind who will know more about this than I do, that there are now plants being planned which will use UK crops.

Q53 Chairman: I think, Permanent Secretary, you can see very clearly some of the challenges. Let us move on to sustainability. In your PSA there is a big paragraph in target number one on sustainability, but what you actually talk about is that all of this is, it says: "This target is designed to be aspirational and cannot be achieved within the period of one Spending Review." I think Mr Stow indicated in his last comment where some of these aspirations lie, but how are we going to measure whether actually you are achieving anything? I think I am right in saying, for example, that your Department is the only one to adopt the Carbon Trust's Management Programme; is that right?

Ms Ghosh: I may be misremembering this but certainly I entered into a similar partnership agreement for Her Majesty's Revenue and Customs when I was there, so I think they may have a relationship with Revenue and Customs, which is a large number of people.

Q54 Chairman: There may be two. If you take that one sort of specific across Whitehall, there is something tangible about sustainability, why so little progress on that particular area across Whitehall and how are you going to demonstrate that sustainability has become embedded in government policy? If I pick, say, the Department for Education, tell me about that sustainability agenda; you must be monitoring it, I am sure?

Ms Ghosh: I am sure there must be colleagues in the Department who can do that. I think the vital building-block for us, and for all departments, is the new proposal for Sustainable Delivery Action Plans, and that will set us baselines and targets to go forward and I think that will be a key tool for us. I think we have a challenge, as a Department. I think we mention somewhere in the Report that we should need to be best in class. Being best in class for us is one vital way in which we will influence other departments to follow our lead, across the whole policy-making as well as internal management issues. We need to show that we are a step change better than other departments, to show them the way forward.

Q55 Chairman: My question was what are you doing to ensure that this aspirational situation of embedding sustainability in government is actually happening? What we have got is a number of indicators, of which 11 out of 19, you have said in your Report, are showing some positive development. The question I asked specifically was, if I take the Department for Education, how would I know they were doing it, what tangible signs are there that sustainability exists in the Department for Education? I see a piece of paper hurtling towards us. Mr Burchell, does that give us the answer?

Mr Burchell: I will attempt to answer. I would differentiate between embedding sustainable development in terms of the operations of the department and, secondly, the development and implementation of policies. As to the sustainability of operations, Helen has already mentioned the Sustainable Development Action Plans, which effectively comprise the sustainable operations but also policies, and we will be having targets around things like water, renewable energy, waste, and so on, which have been around for some time and are being ratcheted up over time. In relation to our knowing whether or not they are having an impact in terms of the policies of other departments, to take your example of the Department for Education and Skills, we have worked very closely with them, as part of our public sector food procurement initiative, to make sure that the sustainability agenda around locally-sourced produce, which is at the heart of that initiative, featured prominently within their guidance to schools and local authorities in respect of the provision of school meals. We have supported that through the provision of guidance and model contracts to both local authorities and other parts of the public sector in order to try to put that into operation. That would be a tangible example of how, through our work with another department, we are having an impact on their policies.

Q56 Chairman: I think it might be helpful if you might care to develop across Whitehall a perspective for us as to how the sustainability agenda is being embedded and indicate to us how you are monitoring, because it is your number one target to promote sustainable development across government and the country as a whole as measured by achieving positive trends in the Government's headline indicators of sustainable development. We cannot have any headlines unless it is fully embedded. I do not want to dwell on the point ad nauseum, but if you could develop this for a paper, obviously we would like to an eye on how you are going for when we meet again in 12 months' time?

Ms Ghosh: I am afraid I do not know my whole span of responsibilities yet, but I have been told that, in fact, I do share a Sustainability Programme Board, one of the key tasks of which is to monitor all the headline indicators that were set out in the UK Sustainable Development Strategy, so I discover that I shall have a key role in monitoring the totality, both in policy and in operational terms, of what departments are doing. I will brief myself and report to you, very happily.

Chairman: We would love to know how you are going to get the other eight indicators onto the positive side.

Q57 James Duddridge: Very briefly, just in terms of how the Department operates. In terms of percentage of what the Department does, how much is solely within the control of the Department and how much is actually cross-functional, either at Whitehall level or at local government level, both of which were touched on?

Ms Ghosh: A fascinating question. Have we done that kind of activity-based analysis?

Mr Burchell: No. If you look at the set of headline indicators you will see that many of those are the lead policy responsibility of other government departments, which is where our influencing role becomes very important.

Mr Stow: The other monitoring mechanism that we will have is through a strengthened Sustainable Development Commission. They will be monitoring the delivery of the Action Plans and helping other departments draw up these Action Plans and then monitoring delivery, so we will have an external, independent body helping us with that monitoring task.

Q58 Mr Reed: Welcome, Permanent Secretary. You have had a lot of other challenges facing you and, in fact, I think it is a job description which is growing before our very eyes. I would like to talk briefly about the climate change issue, not so much challenging but hellishly difficult, from my point of view and I imagine yours as well. The Chairman has talked about the clout of Defra across Whitehall and the ability which the Department has to enable other departments to help achieve government aspirations and policies. With regard to the climate change reduction by 12.5 per cent and the aspiration of 20 per cent by 2010, against 1990 levels, how can you measure now, or can you measure, the contribution made by the Department for Transport in achieving that goal?

Mr Stow: In the Climate Change Programme review, we are looking at originally some 70‑odd different policy measures that we might be able to use to close the gap between where we are now and the 20 per cent target. What we have been doing is trying to analyse for each of those measures, if you like, the bang we get for our buck, in other words, how much carbon saving we can deliver for a particular cost, either to government or to business. We are looking across the whole field of what can be delivered by business, what can be delivered by households, through energy efficiency, and what can be delivered by transport. As I said earlier, the Renewable Transport Fuels Obligation in itself we think will deliver around a million tonnes of carbon saving by 2010. Because we are still doing this analysis, still finalising it and still deciding what are the most cost-effective measures that will go into the programme, we are not yet at a position where we can say exactly how much each of these broad sectors will deliver, but that is the aim of the work which currently is being undertaken.

Q59 Mr Reed: To press you, so the DfT has not delivered anything tangible against the target?

Mr Stow: For the transport measures that have been undertaken so far, I do not have in my head the figure that we attribute to carbon savings from transport. It is the most problematic area, there is no doubt about that. With car usage increasing and aviation usage increasing, we are able to bear down more easily on business emissions and, to some extent, energy efficiency in households than we are on transport. It is the most difficult area.

Q60 Mr Reed: It is, and the biggest cost?

Mr Stow: Probably the biggest single area of improvement in transport is through the emissions from cars, as through the European Voluntary Agreement which tackles the level of emissions from cars, and so cars themselves, or vehicles, are becoming more fuel-efficient and there is continued downward pressure on that, at European level, on what is probably the biggest single contributor.

Q61 Mr Reed: Is there any obvious efficient policy co‑ordination between Defra and DfT on this?

Mr Stow: Yes. As I said, the DfT are now, since the most recent spending round, joint owners of our climate change target and I think that has made a difference. I think, on something like the Renewable Fuels Obligation it has helped us get real engagement from the Department for Transport and we have regular discussions together with them to look at ways in which they can contribute more.

Q62 Mr Reed: Are there any significant impediments?

Mr Stow: I think there is a clear impediment, in the sense that I do not think any minister is very keen on telling people they cannot drive or they cannot take cheap airlines.

Q63 Mr Reed: That will be a political impediment; are there any others?

Mr Stow: I think the impediments to doing some of the things that people might like to do on transport are more political than they are bureaucratic, if you like.

Q64 Mr Reed: Are there any structural impediments, any Civil Service-based impediments towards reduction of the meeting of this target, as we stand currently?

Mr Stow: Really we have worked very well with the Department for Transport and DTI and ODPM in pulling together this package that we will unveil shortly on the Climate Change Programme review, and it has been a good process of engagement and analysis. The decisions at the end are political ones and there are some quite difficult political decisions to be taken.

Q65 Mr Reed: The 12.5 per cent of 1990's emissions equates to what, in today's emissions, as a percentage? A 12.5 per cent reduction against 1990 levels, how does that equate to a percentage reduction against 2005 levels?

Mr Stow: It depends what you are measuring. Currently we are at around a 13 per cent reduction in CO₂ since 1990 and our aim is to get to 20 per cent by 2010, so there is a big gap to close, and existing policies will not get us there, that is why we are doing the Climate Change Programme review. The 12.5 per cent, the Kyoto target, is for all greenhouse gases and we have already met that target. We need to sustain that and we believe that we are well on track not just to meet our Kyoto target but to exceed it.

Q66 Mr Reed: Perhaps I have not been clear enough. The 12.5 per cent of the CO₂ which we emitted in 1990 equates to what percentage of CO₂ that we emit today, in 2005?

Mr Stow: I do not think I can answer that. I am not absolutely sure that I have understood the mathematics of your question.

Q67 Chairman: I think what he is saying is that, in 1990, if the amount of CO₂ was 100 and now we are trying to get 121/2 per cent below that, we get to 871/2, so what is 871/2 over what we are doing at the moment? That is what he is after. We are talking about an absolute sum.

Mr Stow: Yes, but what I said was that we are now at that level of 121/2, 13 per cent below 1990 levels, that is where we are.

Mr Reed: I am not talking about that. As a percentage, on 2005 levels, what is the percentage of 1990 levels?

Q68 Chairman: It is a percentage on where it was in 1990 so it is an absolute figure.

Ms Ghosh: It is an absolute figure.

Mr Reed: Precisely, but as a percentage of the carbon dioxide limit today, it is an absolute figure but as a percentage, I would like to know?

Chairman: We may get impaled on percentages and numbers. If you would like to formulate the question, I am sure Mr Stow will do his best, with his team of experts, to produce an answer that we can all fully comprehend.

Q69 Mr Reed: If you were a betting man, will we get to 20 per cent?

Mr Stow: To use the earlier terminology, I would say it is very challenging.

Q70 James Duddridge: I would like to turn to the enabling programme and the movement of 320 IT staff within Defra, moving them over to IBM for a seven-year programme. I would like to understand how that is going, what the costs are around that and, whilst recognising the need for some type of long-term commitment, seven years in terms of IT seems a horrendously long period of time. Is that too long a period to be fixing these types of agreements?

Ms Ghosh: Just to give a sort of overview, again from my ten-day perspective, I think the relationship is going very well. Yesterday I met David Dockray, who is with IBM UK, to talk about how he felt the partnership was going and to look at some of the performance indicator stuff, which suggested that the handover had gone well, that there continued to be some issues but probably there would have been before, in terms of availability of some systems, and so on, but that if you looked at the basic metrics of the service that they were providing that was good. An area we need to explore more is really taking advantage of the sort of innovative elements of what the IBM contract can offer us. Personally I am very interested in some of the work that they can do, it is more like the wider consultancy element of what they do, to look at our policies and programmes and see how, for example, they can help us think about developing policy more quickly at the beginning of the process so that we have fewer change requests in the IT at the end of the process, also just to help us look at how to benchmark ourselves in IT terms against other organisations. I think the relationship is going well. I think it has been the catalyst for some very good work within the Department on how we manage our IT in general and I have been very impressed by the work that Chris Chant and Andrew and his team and Francesca Okosi have done on a proper analysis of the issues around the failures and successes of our IT programme against some of the AGC criteria for success, and putting in place measures to put it right. We have set up a Project and Programme Management Unit, we are going to do a much more intensive prioritisation exercise, looking at all our change programme, which Andrew will be in charge of, and we are developing a much better intelligent client function on our side to deal with IBM. Actually, coming from where I have just come from, seven years does not seem very long at all, it seems just about long enough to really get a relationship going, to really drive out some of the benefits we can, in terms of service delivery and innovation, and so on. I was actually quite pleased to see that we have options, I think, within the contract for extension beyond seven years, and where I come from, in Revenue and Customs, we had just signed up to ten years with Capgemini, so the norm is for IT contracts of that kind.

Q71 James Duddridge: That would be the norm as well in future, that type of period? It is not because it is the first period and there is a staff transfer, so there is a greater need for security?

Ms Ghosh: No. I think it is just the norm. Because you are really trying to get the full benefit for the taxpayer out of the partnership arrangement, you cannot build a decent relationship and really drive out your benefits for less than that sort of period of time. Obviously, I do not know precisely what our thinking was or why we hit on seven.

Mr Burchell: It is very much a partnership, as opposed to just a contracting out of the provision of your standard desktop services. Therefore, we were looking for a strong business change element and supporting our IT strategy, rather than simply just buying our desktop services from another provider, like Fujitsu, or wherever, therefore we do need that length of period. A question which came up at last year's hearing was whether or not, as a result of that period of time, there was a risk that you were not subjecting the incumbent supply to sufficient competition to keep them on their metal. In terms of the contract, we have open-book accounting and annual benchmarking of day rates against industry standards, therefore we can adjust a day, where it is in the contract, over time as industry averages change. Also, IBM do not have exclusive rights to all of our IT work, although they have a presumption that they have an inside track and a strong case for assisting on many of our projects and applications development, but there are no exclusive rights under the contract and indeed we still use some other contractors, other IT firms for particular pieces of work. Through that mix, we do maintain that competitive element.

Q72 James Duddridge: It was not until I visited Defra that I came across this term, as I am new to the Select Committee, core Defra and executive agencies. Given the experience of IBM and that the agency status is shifting people away perhaps from the direct control of Defra on a day-by-day basis, do you think that some of those agencies, or indeed some of core Defra, also could be outsourced?

Ms Ghosh: I am sorry, I was answering a question which I thought was a different question, which was going to be, are IBM also going to serve those agencies, but that was not the question you were asking.

Q73 James Duddridge: No. It was more whether the executive agencies and other elements of core Defra could easily be outsourced, as you have outsourced the IT to IBM?

Ms Ghosh: Obviously, where I am today, I do not know what ministers have said about those issues. I imagine it will be an issue that we are asked to look at by our Treasury colleagues in the Comprehensive Spending Review, because the issue about what is the best way to serve customers and achieve efficiency, I guess, will be one of the underlying issues there. I do not know if we have got any particular plans announced already, or not, as the case may be.

Mr Burchell: No. As some may be aware, we are reviewing the three science agencies, in terms of recognising that we want to place them on a more sustainable financial footing, in terms of the business they do in relation to the costs they generate. No decisions have been taken about whether or not one needs to move those to a different ownership model.

Q74 James Duddridge: Did you say the three science agencies? What are those?

Mr Burchell: Yes. The Veterinary Laboratories Agency, the Central Science Laboratory and CEFAS, which I think stands for the Centre for Environmental Fisheries and Aquatic Science.

Q75 Chairman: We are going through a period of change in the management of rural Britain. In terms of the PSA target three, on bringing the SSSIs into favourable condition, are you on target to achieve the 95 per cent target by 2010?

Ms Ghosh: We have made very good progress. I am just looking at my WRAG status here. I understand that the baseline figure was 56.9 per cent and now we have got to 67.4 per cent of SSSIs on target by March this year. In fact, as we speak, or two months ago, we got to 68. English Nature have done an excellent audit, and in each case, of reasons for why the state of the particular SSSI may not be quite as good as we want. I understand that it is, of course, one of those targets where it requires only for something to go wrong with particular SSSIs at the last moment for some external reason for the target to be missed, but I think we are pretty confident that we will achieve that.

Q76 Chairman: Almost by definition, as you have done impressively two thirds, the rest are going to be more difficult?

Ms Ghosh: Exactly, and all sorts of external factors could hit us off course at the last moment.

Chairman: I suppose what is going through my mind is whether, in terms of the changed arrangements, with Natural England coming into existence, there may be some disruption of progress on this, and in some cases some SSSI work depends on local authorities and their funding and they continue to tell us, as Members, that they are under pressure. Again, I think it might be quite useful if we could press you for some further commentary on how you see that area of your future work.

Q77 Mr Williams: Can I ask whether the Department has received Peter Hain's Guide to Devolution, which I understand he is sending out to all central government departments?

Ms Ghosh: I am not aware that I have received it. I am looking round at my private office. Tell us a bit about it.

Q78 Mr Williams: My understanding is that central government departments do not really understand the devolution settlement and how they should react within it. Do you have any special arrangements within your Department for working with the Parliament in Scotland and the Assembly in Wales?

Ms Ghosh: I understand that we do, for which I am pleased.

Mr Burchell: Yes. Ministers and officials hold regular meetings with their counterparts in devolved administrations. Because many of the issues which we lead on in the European arena around fisheries and agriculture, many of these sorts of domestic arrangements are of course devolved under the devolution legislation, it is important that we get an alignment between the interests of devolved administrations and our national lead responsibility, so there are regular meetings at both ministerial and official levels.

Ms Ghosh: I know that I have just agreed that we should have a Management Board trip to meet our Scottish counterparts in the New Year sometime, and I guess we will do the same with the other devolved administrations.

Mr Burchell: Yes, and in relation to the agencies for which we are responsible, the SVS is actually a GB-wide agency and on the ownership board which I chair we have representatives from both Wales and Scotland, and, of course, the Environment Agency covers both England and Wales and has very close working relationships with the Assembly.

Mr Stow: As somebody said, relationships are quite complex because of the very varied situations. We have to make sure that we understand at each moment whether we are speaking for England or for England and Wales or for Great Britain, or whatever. This is partly because a lot of our business is done at EU level, where the United Kingdom Government has a responsibility, but, as Andrew says, the follow-up and implementation is at the level of the devolved administrations, so it is absolutely essential that we work very closely together. Certainly, on my side, the Environment side, we have regular discussions with our devolved administration counterparts.

Q79 Mr Williams: In drawing up legislation, does the Department look for an enabling type of legislation dealing with functions that are transferred to Wales? Does the Department have a particular style, because it seems to me that certain parliamentary draughtsmen achieve this in different ways, or try to achieve it?

Mr Stow: What we are trying to do on environmental legislation is, on the implementation, which is mostly about the implementation of the EU Directives, we have now a formal project management approach to each piece of legislation. The Welsh Assembly are represented in our project management teams and sometimes will choose to piggy-back on English legislation and sometimes will choose to do it themselves through the Welsh Assembly, but they know from the very beginning how we are approaching these issues. The Scots are somewhat more distinct because they do everything for themselves, but nevertheless, again, we bring them into these discussions.

Q80 Chairman: Our time is drawing to a conclusion, but I want to turn to rural affairs and the rural economy, because that is going to be a central area for Defra's input, particularly in the light of the change with the Common Agricultural Policy and the decoupling of payments and the development of alternative economic activity in the rural economy. In your PSA target number four, you have committed yourself to reduce the gap in productivity between the least well-performing quartile of rural areas and the English median by 2006 and improve the accessibility of services for rural people. I see in this year's Report you have not made any assessment of progress towards that target. Why?

Ms Ghosh: At a high level, I understand that we have had our programme in place on rural productivity only since 2003 and there are issues about levels of resources.

Q81 Chairman: It says here it went live on 1 April, so that is two years and you have not made any assessment as to whether you have had any impact in moving even one percentage point towards an improvement?

Ms Ghosh: No. I will hand over to Andrew for the stuff on measurement, but I think actually it is a very challenging target.

Q82 Chairman: Your Department signed up to this thing?

Ms Ghosh: We have got decades, in some cases, for these particular bottom-quartile rural areas, of economic decline to catch up on and in some cases the problems that they face are intrinsic: the sparse populations, which then produce issues around communications, and so on. I think actually it is very challenging and it is quite recent. I will hand over to Andrew.

Q83 Chairman: It may be that Mr Burchell enlightens us with new news.

Ms Ghosh: I do not know if there is better news.

Q84 Chairman: What have you been doing for the last two years?

Mr Burchell: You have actually hit the nail very firmly on the head, in terms of the difficulty we have in measuring progress against this target.

Q85 Chairman: Notwithstanding this Balanced Scorecard you were telling us about earlier. This appears not to have hit the radar then?

Mr Burchell: I would have to go back and check the latest dashboard on that, Mr Chairman. In relation to this particular target, there is an issue over the availability of data. The data which measures productivity on a regional basis is produced with a very considerable time‑lag, of up to two years. For my part and I think others, that would call into question whether or not the actual measurement of that target and the actual definition of that target is very useful from a real time point of view, because there is such a lag that you cannot actually see how far you are making progress.

Q86 Chairman: Basically, "if we can't achieve the target, change it"?

Mr Burchell: We are doing work at the moment to identify other measures and other indicators which would provide information on whether or not we will be on course to meet that, because clearly it is not satisfactory that you can only measure progress after a period in which you are supposed to have met that target.

Q87 Chairman: Really it is a bit of a nonsense then, it is a bit of a meaningless target, is it?

Mr Burchell: We faced a similar situation a few years ago, in relation to data with respect to waste recycling, and so on. At that stage we came up with the means of getting some more real-time information through contacting local authorities. Clearly we need to look at how we can get that information, in terms of progress, with respect to this target, because, as I said, waiting for two years is not very satisfactory.

Q88 Chairman: You have sub-contracted to the Regional Development Agencies, which are mentioned in the target, further work to develop the rural economy. Obviously, when you dreamed up this target, or it was imposed on you by the Treasury, somebody was trying to measure, or give you some kind of measure, of improvement of economic activity in the rural domain. If you are going to be able to monitor the new ways of developing the rural economy then perhaps we need some new forms of measurement and assessment because clearly this one has remained moribund for two years, from what I can see?

Mr Burchell: I would not like to leave you with the impression that we have done nothing for two years. When the target was set we did not actually have a baseline against which to measure performance, in terms of putting a programme over the two years, so much of our effort to date has been in terms of establishing that baseline. Having established the baseline then clearly we need to measure progress against that.

Q89 Chairman: If you could not establish a baseline, how on earth do targets get agreed to, where then, subsequently, in hindsight, it becomes impossible to work out where the starting-point is? I think it raises a question about the credibility of a target-setting agenda where, as you say, it is aspirational, in one of them, and here we have another one which is extremely difficult to establish (a) where we started from and seemingly (b) where we are going?

Mr Burchell: I think that is a fair comment.

Ms Ghosh: It is a fair cop.

Q90 Chairman: In the public spending round which is currently under way, are all of these PSAs going to be re‑examined?

Ms Ghosh: Yes. In fact, that was going to be my response, "It's a fair cop; I think you are right." It has just been pointed out, of course what it does do, although it sounds rather perverse, in answer to your question, is that having the target encourages us to get the information. Given that this is a very valid thing to be measuring, having the target encourages us to get the information. I think one of the things that all departments will be doing, although this is over quite a long timescale and it is a phased process, about which Andrew knows more than I do, the Comprehensive Spending Review will give us the opportunity to look again at the PSAs for the period beyond the current SR2004. I think, as a Department, we will need to do some pretty early thinking of, in some cases, what are sensible targets and what are perhaps more sensible measures of those targets. I am very keen that Andrew and his team, with colleagues across the Department, should get down to that work as soon as possible, so that we are on the front foot when we come to debates with the Treasury.

Q91 Mr Reed: Do we not have a baseline for measuring progress?

Ms Ghosh: We do have now.

Mr Burchell: Yes.

Q92 Mr Reed: What do we expect to happen between now and 2006?

Mr Burchell: In terms of movements against that baseline, given that we will not be able to assess performance against that baseline for about a two-year period, in terms of impacts on the ground, clearly we expect lots of things to happen. Our ability to measure that impact in an aggregated way against that particular baseline measure clearly causes us some problems if there is a two-year delay. That is not the same thing as saying that nothing is happening for two years and not having any positive impact on the ground in terms of things we are trying to effect.

Q93 Chairman: In conclusion, can I ask just one question in terms of your future PSAs. In Appendix 3 of your Report, on page 297, target 11 is a commitment about the eradication of BSE. Are you proposing to have a similar target to deal with Bovine TB?

Mr Burchell: We have a target for Bovine TB already.

Q94 Chairman: Where is it then?

Mr Burchell: It is part of our SR2004 targets. It is PSA 9. We are shortly to publish our Autumn Performance Report, which will be the first time we will have reported on our SR2004 targets, which of course did not kick in until April 2005.

Q95 Chairman: In case I have made an error, I will apologise in advance, but in which Appendix is this one?

Ms Ghosh: This is the 2004 PSA.

Mr Burchell: Page 293, I am told.

Ms Ghosh: The target is "a reduction in the spread of Bovine TB to new parishes to below the incremental trend of 17.5 confirmed new incidents per annum by the end of 2008."

Mr Burchell: It is on the left-hand side of page 293. On December 16 we will be publishing our Autumn Performance Report, which will be the first publication covering the targets in the SR2004 period.

Q96 Chairman: This is purely to contain the spread but not to deal with where there is currently an outbreak?

Mr Burchell: Yes, a production spread.

Q97 Chairman: The reason I asked that question is that your Department supplied us with part of your strategy, an interesting financial projection, as to what, if current trends of the incidence of the disease were to go, you would have clocked up in about another eight or so years' time. Off the top of my head, I think the figure of some £370 million a year annual expenditure was racked up, it was a huge number. I think that combined both compensation spending and R&D but, as I say, I do it without having the benefit of having it in front of me. Are you going to develop a more rigorous PSA then to deal with Bovine TB, bearing in mind the obvious pressures it is putting on your budget?

Ms Ghosh: Obviously, at this stage, this side of the CSR, we cannot commit to what our set of PSAs may be.

Q98 Chairman: You have a negotiation about it, do you not?

Ms Ghosh: Indeed, and it will depend on the emerging policy that ministers adopt on the question of the spread of Bovine TB, and that will be reflected appropriately in the PSA.

Chairman: Before my colleagues flee, can I thank you for your bravery in coming after ten days and answering our questions. I think you have got an interesting and useful overview already of your Department's challenges and we look forward to having you in front of the Committee on subsequent occasions, and maybe after six months we will have a little 'take stock' session, which will be useful. Can I thank Mr Stow and Mr Burchell for ably assisting you and also those behind you who supplied occasionally pieces of paper at the appropriate moment. We bring this session to a conclusion with the proviso that we will write to you seeking answers to a number of questions that we did not have time to put to you. Thank you very much.