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Mr. Todd: One might indeed say that. One can only speculate as to what advice was given on the implications of making this already difficult process of business change more complicated still.
Mr. Roger Williams: Does the hon. Gentleman agree that even if DEFRA had wanted to go down the dynamic hybrid route, it could have postponed that move for a year and simply used the existing, well-established schemes?
Mr. Todd: The hon. Gentleman is right. There were many opportunities to make the process simpler, even in some of the idealistic choices that were being made.
I add a further layer: even after the choice to have a more complex model was made, that choice was not stuck to. Instead, there were several flexes and changes, albeit for perfectly good reasons—people said, “What about this or that?”, and changes were made. If choosing the dynamic model was almost suicidal, to permit wilful change after that point was actually suicidal and would have doomed the project to failure in any professional eye, although I cannot imagine which professional eyes were looking at it, because it is startling that the level of risk was not thought through and shouted from the rooftops for all to hear.
I attended an Adjournment debate on the fiasco in the spring of last year—I think that the right hon. Member for Fylde (Mr. Jack) was there—in which the responding Minister, who had taken over responsibility for the task in the Commons, read out a number of the changes that had been made to simplify the process of handling individual claims. I remember intervening to point out that surely many of those steps could have been taken right from the start. One issue was the obsessive pursuit of tiny, trivial errors within a claim, relating to the precise area of the claim and other such matters. Those steps were not demanded by EU law; we had imposed them, in our usual, determined attempt to set a platinum standard for our administration of a system in this country. It was good of the Minister to be so candid about the changes that were being made to make it simpler to pay farmers, but it did lead one to wonder why anyone would design a system containing that kind of obsession, which would again accentuate the cost of the process and the risk of failure.
The National Audit Office report is useful in cataloguing the review board’s reports on risk and the gateway reviews of the Office of Government Commerce. I do not know what that showed observers within the Department, but outside the Department, it painted an alarming picture of repetitive emphasis on risk and the difficulty of maintaining the project to deliver payments to farmers on course and on budget. No one with even a cursory knowledge of the reporting mechanisms for the project would have found it surprising that it was running into desperate difficulty and crisis. One can only wonder what those who received the documents ever did with them—a point to which I shall return briefly.
The OGC may not be above criticism, and the Select Committee correctly highlighted some possible areas where it went wrong, to which I add one from a more technical perspective. I do not think that the OGC looked properly at the balance between business change—the human process side of getting people to
do something in a particular way—and the system development element, which would allow those people to do those tasks more readily. In business change, those two elements are a seamless activity; to treat them in a discrete way, as the OGC does, to some extent, by saying, “This is a systems project,” risks the possibility of grave management error. The OGC analysis does not highlight firmly enough some of the failures regarding how human beings were expected to do certain tasks.
So what are we going to do about this? What do we learn? First, it should be clear that reports that show such a risk should not merely be owned within the Department to which they are written. It is quite obvious that Departments have widely varying competences for managing major projects, and this Department had a very low competence. I have had some unkind exchanges with the Department’s former permanent secretary about his apparent lack of knowledge in this area. I did not think it was a good sign when he was first interviewed on information systems issues, and I do not think that he was well equipped to be a challenging leader of a Department going through such a process of technology-enabled change. So this should have been shared more widely.
Secondly, we need to be constantly aware that these are not systems projects: this is a business change programme, starting way, way back. There is a long history, and it needs to be seen as a totality. We develop systems to help people to do a job better—they are not there for their own purposes—and we need to understand the process of managing the human beings far more in some ways than we need to be obsessed with the details of the technologies being used.
David Taylor: I am grateful to my hon. Friend and near neighbour for giving way. He has been talking about the human impact of the changes that were taking place. Does he recall the figures? Of the 3,500 staff in the Rural Payments Agency, it was planned that 1,600—almost half—were to lose their jobs during the change programme process. That is likely to have a seriously deleterious effect on morale, is it not?
Mr. Todd: Indeed so. I accept that entirely.
There are other areas to focus on, the first of which I have touched on. When people define what they are doing, the project management must be robust in resisting change. To permit constant adjustment in a major project builds risk every time that it happens, and I see that mistake repeated endlessly in such systems and process change projects.
The final point I want to make is that change management is a skill, and when we appoint people to lead programmes of major change, we must be aware of the challenges and the tasks that they face. I cannot believe that enough thought was given to the capabilities of the individuals who were asked to lead this project when they were appointed. These are not trivial tasks of normal, ongoing senior management; they require a level of human leadership, technology awareness and project management that very few people have, and those mistakes were innate to the project right from the beginning.
9.8 pm
Kelvin Hopkins (Luton, North) (Lab): I congratulate my hon. Friend the Minister on his appointment, and I look forward to many future debates with him on these and other matters.
I want to address the broad issue of the CAP, and the Select Committee’s fourth report refers to the “Vision for the Common Agricultural Policy”. I have spoken several times in the Chamber about the CAP and have made many of the same points before, and I think that they are still valid: the CAP is nonsense and should have been abandoned a long time ago. I hope that it will be abandoned and replaced with a much more sensible agriculture policy. That is the broad thrust of the second relevant document. It may have been written in the Treasury, but perhaps the Treasury has got it right. It talks about the vision for the CAP, but perhaps “CAP emerging from the darkness” or some such title would have been more appropriate; vision sounds rather too exciting.
To go back in time to 1980, when I wrote my first policy paper on the CAP, I suggested at that time that it ought to be abolished. I have not changed my view in all that time, and I have written many further papers. I recall, among other things, a substantial report by the National Consumer Council in the 1980s, which said how bad and damaging the CAP was, particularly for British consumers. Since then, I have participated in debates in the Chamber and I have made the point many times in European Standing Committees. More recently, I have made it in the European Scrutiny Committee, where we recently interviewed the former Foreign Secretary.
If one repeats a message that has some common sense at its heart, eventually it is taken notice of, but it takes a long time and many voices. Mine is just one voice. In the recent debates about international trade, the righteous anger of the poorer nations, which have been so savagely affected by the developed nations’ protectionist policies in agriculture, is starting to have some effect. Abolition of the CAP is the way forward.
Bob Spink (Castle Point) (Con): The hon. Gentleman is generous to give way, considering that I have just come into the Chamber. While he is reminiscing, does he recall that the Government’s policy on the EU budget was three-pronged? First, they wanted to limit its size as far as possible; secondly, they wanted fundamental reform of the CAP; and thirdly, they wanted to retain the rebate. Is he sad that there has been abject failure on all three counts?
Kelvin Hopkins: I shall come on to some of those points. I will make at least one of them quite strongly later, but I do not have much time, so if Members will forgive me I will plough onwards.
The first sentence in the summary of the report states:
“The objectives of the Common Agricultural Policy...have remained unchanged for...50 years and are now an anachronism.”
They were an anachronism even quite a long time ago, and they certainly are now. That is an understatement. The fact is that the effect that the CAP has had both on the British people and on the rest of the world has been
a disgrace. The Government’s “Vision” paper says that they look towards an agricultural industry that does not rely on subsidies or protection. That is almost the opposite of the CAP. I would not go quite that far, because it is legitimate for nation states—member states of the European Union—to subsidise agriculture selectively where appropriate for all sorts of social reasons, and to ensure security of supply for our own food. There are reasons to subsidise and sometimes to protect, but that should be done at national level, because the agricultural systems in every country in the European Union are quite different. We are one of the least agricultural countries in terms of the size of the industry, but our industry is still important.
Mr. Roger Williams: If we had different forms of support in different countries, how could we have a common market and free trade between the countries?
Kelvin Hopkins: By definition, if one has some degree of protection, that is not quite free trade. We have absolutely no free trade in agriculture at the moment. I am not suggesting that we should have free trade in agriculture or that we should take away all subsidies and all controls. It is a fundamental industry, and there are all sorts of strategic reasons, as well as social reasons, for wanting to sustain it.
We had the Doha round, following which there was very little change, and the UK presidency last year, when again there was an attempt to get some sort of change after President Chirac attacked Britain over our rebate, following his failure to win his referendum. He wanted to lash out at somebody, so he lashed out at us. I suggested in the Chamber—I think that I was the first—that the Prime Minister ought to say, “Okay, quid pro quo: you get rid of the CAP and we’ll forget about our rebate.” We would not need a rebate if there was no CAP. Of course, that did not happen. At the end of the day, the Prime Minister agreed to a settlement with almost no change in the CAP and a substantial increase in our net contribution to the European budget for the future. It was such a poor settlement that even The Economist was moved to say that no settlement would have been better than that settlement.
The argument was that we should help eastern Europe. I am happy to help poorer nations, and if we have to have fiscal transfers from the richer nations to the poorer nations, that is fine, but they should be open and above board so that we know what we are doing. What we have through the CAP is, sometimes, fiscal transfers from rich countries to richer countries, such as Denmark. That is not right. If we are going to give assistance to the poorer nations of the EU, we should do so on a simple basis so that contributions and receipts are proportionate to the relative prosperity of different nations. That would be a fair system, and I have suggested it many times in debates. Indeed, about a year ago, I noticed in the small print of one European document that was debated in the Chamber that that proposal was specifically rejected. I do not know whether it was just my suggestion that had been rejected, whether the message had been picked up, or whether other people, too, were articulating what, to me, was a sensible proposal.
The cost of the CAP to the UK is enormous. As a result of the settlement last year, our net contribution will go up from £4.7 billion in 2007 to between
£6 billion and £7 billion in 2013. We can still subsidise our own agriculture, and we will be much better off in Exchequer contributions. Without the rebate, we would pay £12 billion this year, increasing to £20 billion by 2013, so the rebate still makes a difference. At the same time, however, we are making a substantial net contribution simply because of the cost of the CAP. Food prices are important, too. I speak as a representative of a purely urban constituency—I have no rural interests at all—but my constituents have a strong interest in the CAP, because they pay vast sums of money in higher food prices every year. It is estimated that the CAP costs £15 billion a year extra in food prices to consumers in Britain—£250 per person, or £1,000 for a family of four. For some families in my constituency that is a lot of money. It might not mean so much to more affluent people, but to some people in my constituency it means a great deal. If we want to change the net fiscal transfers, let us do so on a much fairer basis.
The Select Committee report says the Government should
“direct the debate towards scrapping the existing CAP and replacing it with a ‘Rural Policy for the European Union’.”
Fine; we have made progress, if the Select Committee is urging the Government to proceed in that direction. I absolutely agree. The rural policy has not been specifically defined, but the repatriation of agricultural policy could give us a very good rural policy and save us vast sums of money in the process. It would be fairer, too, to the developing world, which produces food much more cheaply than we can. We could import food from developing countries, rather than having to choose more expensively produced food from the EU.
We have a problem, because the UK is constantly talking about reform, but other countries in the EU are constantly resisting it. Perhaps that is partly because they benefit a great deal from the CAP—it is a disbenefit for us—but they appreciate, too, the fact that it is part of the glue that holds the European Union in its current tight arrangement. I would like to see—I have said so many times, and many Members agree—a much looser arrangement in the EU of independent member states co-operating on a voluntary basis for mutual benefit, instead of something governed by bureaucracy from the centre, and by a budget over which we have very little control.
May I read a final quotation from the report to show the problem? On page 8, the report cites continental politicians who have commented on Britain, and says that a
“German farm leader accused the UK government of ‘poisoning the political atmosphere’ in 2005 with its constant attacks on the CAP.”
If that is the tone, even raising the issue is “Don’t mention the war” stuff. Unfortunately, the softly-softly approach advocated by the hon. Member for Brecon and Radnorshire (Mr. Williams) will not work.
We are the country most likely to launch reform, so we must drive it through. We must set a date by which we expect the CAP to be abandoned and replaced by a more sensible approach to agricultural policy in Europe—and, indeed, in the rest of the world. No other country will take the lead; we have to take it, and we are best placed to do so, because we suffer discrimination and disbenefit as a result of the CAP. It is therefore our job to do it.
9.19 pm
Mr. James Paice (South-East Cambridgeshire) (Con): I declare my interest, which is set out in the Register of Members’ Interests, minuscule though it is. I confess that I did not have the willpower of the hon. Member for South Derbyshire (Mr. Todd)—
May I welcome the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Chatham and Aylesford (Jonathan Shaw), to his first Front-Bench post? I know that he has been a Whip, but this is his first ministerial position. If this is his first outing as Lord Rooker’s spokesman on Earth, we look forward to further discussions.
I congratulate the Environment, Food and Rural Affairs Committee on producing two excellent reports. As the hon. Member for Leicester, South (Sir Peter Soulsby) said, it is a great shame that the Government’s responses, which I understand have been forwarded to the Committee, were not produced in time for the Committee to publish them. As a result, the House cannot consider the responses tonight. It would be wrong of me to seek to repeat all the points made by the many hon. Members of all parties who have spoken. It is fascinating that all the Government Back Benchers who spoke on the report on the Rural Payments Agency totally endorsed the report’s criticism. As has been said, that criticism is extremely trenchant. When a Select Committee, acting unanimously, uses adjectives of the sort found in the report, it demonstrates how serious the situation is.
The hon. Member for South Derbyshire, using his professional knowledge, explained to the House where many things went wrong in the management of the change, and the management of the delivery of the single payment system. The problems with the SPS started with the mid-term review. I want to make it clear that the Opposition supported the principles behind the changes, and the principle of decoupling support from production. Our only criticism is that the changes did not go far enough. I will return to that point when I move on to discuss the second report.
We also supported the later decision to adopt a dynamic hybrid. Some of the reasons that the Government gave for the decision were right: it is difficult to justify paying people in 2012 for what they did 10 years earlier, and it will be easier to move to whatever happens post-2012 if such a change is made. However, as the report rightly says, the dynamic hybrid was apparently adopted in year 1, after the Government made the decision to start the process. As several Members have said, many of the problems could have been alleviated if we had delayed the start. I am convinced that that is where the main problems began.
As we have heard, the programme involved the extension of the scheme to massive areas of land and to many more farmers, but there was no recognition of the impact. That resulted in 48,000 extra holdings, and 360,000 extra parcels of land having to be registered. It is an odd way of weaning an industry off subsidy suddenly to give the subsidy to people who did not have
it before, but that seems to be the policy that was adopted. As we have heard, the Government did not adopt the de minimis figure of €100, although that would have taken out 14,000 claimants. Indeed, I would have supported a much higher de minimis figure. As we heard, two months later, it was decided—albeit as a result of pressure—that a third region would be added. That came on top of everything else.
Many issues remained unresolved. Those of us who were watching events or were involved at the time were conscious of discussions on what comprised an orchard, and on fruit, vegetable and potato permits and to whom they belonged. All those problems continued while the RPA was allegedly trying to set up the necessary systems. As my right hon. Friend the Member for Fylde (Mr. Jack) said, on 19 January 2005, the RPA announced that payments would be delayed. It is interesting to note that the then Secretary of State, the right hon. Member for Derby, South (Margaret Beckett), said a year later that
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