Accountability
147. This sorry saga has cost farmers about £20m
of their own money. Defra is likely to secure only £7.5m
of the expected £164m savings in the Department and the RPA
from the SPS and wider change programme.[261]
Defra had to give the RPA an additional £46m in 2006-07 to
cover higher than expected administration and capital costs at
the RPA,[262] although
as we said in our recent report on Defra's budget we are doubtful
whether this tells the whole story.[263]
A total of £131m in provisions and contingent liabilities
against disallowance by the Commission was entered in Defra's
Report and Accounts for 2005-06, and in the Spring Supplementary
Estimates published on 20 February 2007 £305m was transferred
from the Reserve to Defra's resources to cover the potential disallowance
which could be levied by the European Commission on CAP Pillar
1 payments accrued up to 31 March 2007, mainly on the 2005 and
2006 SPS scheme years. Defra has not revealed how much of that
£305m relates to the SPS, or whether the £305m overlaps
with any of the £131m in the 2005-06 accounts.
148. Sir Brian Bender told us in December 2006 that
"If you set up an executive agency to implement things ultimately
the chief executive of that agency is the accountable person."
He admitted, however, that he felt "both deep dismay and
a sense of responsibility" when he heard of the failure after
he had left the Department, and that he shared in the responsibility
that attached to Defra. [264]
Helen Ghosh said that Defra would have expected the RPA to have
foreseen the detailed problems with its business processes, and
that that was why the Secretary of State had felt it was crucial
to move Johnston McNeill. She was not saying, though, that he
"was personally and solely responsible for the fact that
there had been complications in the system, there had been some
delays in the system and some customers were not getting as good
a customer service as they might have done. I am not saying it
was all his fault".[265]
Lord Bach believed that "I actually do not think that Johnston
McNeill as a personality is someone who should be crucified …
My view is that the top management of the RPA was not up to task
on this occasion".[266]
149. Johnston McNeill was Chief Executive and Accounting
Officer of the independently accountable delivery body that failed
so clearly to deliver, and which failed to foresee in time the
fact that it would not deliver. As such he is accountable for,
and must bear responsibility for, the failings of the RPA. If
he felt that he was being asked to carry out a task that he would
not be able to defend on value for money grounds to the PAC, he
should have sought a formal written instruction in accordance
with the Treasury's rules on Government Accounting. His removal
from post on 15 March demonstrates that Defra ministers and the
Permanent Secretary had lost confidence in him and that they held
him accountable for the failure. On 1 December 2006 he was dismissed
from Defra.
150. But Mr McNeill was not personally and solely
responsible for the failure to pay farmers. The Agency failed
largely because Defra asked it to do too much in too short a time
and did not pay enough heed to the Agency's warnings about the
risks of what was being proposed. The governance arrangements
stipulated that Johnston McNeill should share senior responsible
ownership with Andy Lebrecht, and all the crucial decisions and
recommendations to ministers on implementation were made jointly
with Defra by committee through CAPRI or the ERG. We conclude
that it is unfair for McNeill to be the only person to be held
accountable when he was not given the sole responsibility for
delivery.
151. The action taken against Johnston McNeill by
the Secretary of State and the Permanent Secretary contrasts strongly
with the fortunes of many of the others closely involved. The
periods in office of a number of those persons is shown in the
Annex.
152. Some senior members of the RPA leadership who
were closely involved in the failed project remain in senior posts.
Mr Hewett and Mr Vry both expressed to us their unhappiness about
being personally associated with this failure.
153. Sir Brian Bender recruited Johnston McNeill,
was his line manager, liaised with Accenture and held regular
discussions with Mr McNeill. He chaired the Executive Review Group
which was supposed to provide the 'challenge' function but which
became heavily involved in the policy making process. He was aware
of the high risk and complexity of the project. The RPA was an
arm's length delivery body, but was still part of Defra which
he led. Defra set the Agency's objectives. The Single Payment
Scheme was one of Defra's highest priorities, as it underpinned
the financial wellbeing of England's rural economy. If a failure
to deliver on such a scale had occurred in a major plc, the chairman
and the senior operating executives would have faced dismissal
from post. With this in mind the Committee continues to be astonished
that Sir Brian Bender continues to hold the rank of Permanent
Secretary. If he does not tender his resignation the Head of the
Home Civil Service should explain why a failure such as this results
in no penalty.
154. Senior Defra officials worked closely with RPA
and were party to many of the decisions on SPS implementation.
Some remain in senior posts. Andy Lebrecht, Director General of
Sustainable Farming, Food and Fisheries from the creation of Defra,
was joint senior responsible owner of the SPS project and co-chaired
the CAPRI board with Johnston McNeill from which advice to ministers
usually originated. We have seen no evidence that he alerted ministers
to the likelihood of failure before 14 March. His long standing
knowledge of the importance of timely payments to farmers and
his full involvement in the SPS project from its inception mean
that he should now consider his position. If he chooses to stay,
the Department in its response to this report should explain to
us in straightforward language why being so closely associated
with the waste of large sums of Government and farmers' money
and the widespread disruption of England's rural economy should
result in no personal penalty being paid.
155. Defra ministers set the policy and took the
decisions in spite of the loud warnings from the RPA about the
high risk of the model they were advocating. They did not detect
the serious problems with implementation and accepted the assurances
of the Department and the RPA that the SPS would be implemented
on schedule. Helen Ghosh told the PAC that ministers had played
an "exemplary" strategic supervisory role, without getting
into the detail or second-guessing operational issues.[267]
Lord Bach thought it was difficult for ministers to strike the
right balance between getting too involved in operational detail
and delegating too much, but did not think that either he or the
Secretary of State was to blame for the SPS having gone wrong.[268]
156. Lord Bach was removed from the Government at
the reshuffle in May 2006 and himself believes that he lost his
job at least partly because of the problems with the SPS.
157. At the same reshuffle Margaret Beckett, who
had presided over Defra since its creation in 2001, was promoted
to be Foreign Secretary. Although she may have delegated much
of the work on the SPS to ministerial colleagues, she would have
been aware of progress with implementation via submissions to
ministers and the attendance of her special adviser at briefings
for Lord Bach. The SPS was also one of the Department's key projects
and one of its top risks. With the experiences of BSE and Foot
and Mouth Disease so fresh, we would have expected the Secretary
of State to be active to make certain that this key Defra policy
choice arising from her successful negotiation of fundamental
CAP reform was not implemented in a way that harmed farmers' interests.
158. Margaret Beckett failed to volunteer an oral
statement to the House at the time of the failure of the SPS becoming
apparent. We are pleased that the present Secretary of State was
prepared to come to the House to make an oral statement on the
RPA in November 2006; we see this as an indication that he is
personally engaged with the efforts to put the SPS back on track.
159. It will seem strange to many in the rural economy
that right at the top of Defra no price for failure has been paid
by the now Foreign Secretary. Leaving others to get on with the
day to day delivery of services should not remove the obligation
from the holders of high office to do more than just apologise
and mouth the words "I am taking responsibility". It
should be the case that when a Department fails to deliver a key
programme right at the heart of its fundamental responsibilities
the holder of the office of Secretary of State should not be rewarded
with promotion but its reverse. New ministerial guidelines should
now be drawn up to make it even clearer that if individuals are
prepared to accept the glories that come with high office they
also know precisely what to do if fundamental Departmental failure
occurs.
261 NAO, The Delays in Administering the 2005 Single
Farm Payment in England, HC (2005-06) 1631, p 20, para 4.2. Back
262
Ev 241. Back
263
Second Report from the Environment, Food and Rural Affairs Committee,
Session 2006-07, Defra's Departmental Report 2006 and Defra's
budget, HC 132, para 31. Back
264
QQ 996, 1102-3. Back
265
Q 247. Back
266
Q 787. Back
267
Committee of Public Accounts Minutes of Evidence, 30 October 2006,
QQ 37-8. Back
268
QQ 780 and 784. Back
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