Select Committee on Environment, Food and Rural Affairs Third Report

Conclusions and recommendations

1.  Defra should establish why its decision making processes did not require an adequate examination in 2003 of the implications and changed risk profile associated with introducing the Single Payment Scheme in parallel with the RPA's Change Programme and its associated new business processes. (Paragraph 31)

2.  The policy reasons for the Government choosing the dynamic hybrid are appreciated, but such decisions should not be made in isolation from practical realities. The choice of the dynamic hybrid model made the RPA's task a more complex one than implementation on a historic basis, especially with the Change Programme being implemented in parallel with the SPS. The policy suffered from the closed nature of discussions during its development and a lack of real scrutiny of the implications of what was proposed, such as the fact that payments would henceforth be made outside the farming mainstream. (Paragraph 47)

3.  We conclude that Defra ministers selected the 'dynamic hybrid' model in the knowledge that it was inherently more complex and risky. But they did not seem to be aware of what they were letting themselves in for. Defra officials did not quantify these risks for them, and relied too easily on RPA assurances that the choice was deliverable in the time available. These assurances were not based on detailed analysis, and were partly motivated by a desire to escape from difficulties with the development of IT systems to pay the previous schemes. No proper appraisal was made of the volume of work that the chosen policy would entail, both in terms of the number of claims and, even more significantly, the number of land changes that the RPA would have to deal with: land not formerly incorporated would now be within the system and there was a strong incentive for landowners and farmers to register as much land as possible. Defra should now identify those who were responsible for this fundamental failure to recognise the consequences of its own actions on the RPA payment delivery mechanism. Senior officials who presided over the lack of policy analysis should indicate why those actions were not undertaken. (Paragraph 48)

4.  The amendment of the original dynamic hybrid decision so soon after it was announced, by adding a third region, reinforces our conclusion that the wider implications of the dynamic hybrid model had not been properly thought through when the decision was made. It also made the RPA's task yet more complex and lost them more time. Defra should provide a commentary to explain this failing in its internal decision making process. (Paragraph 49)

5.  RPA efforts to reduce risk of EU disallowance in fact increased the risk of failure in policy delivery. The RPA and Defra ended up with worst of all worlds: both a failure to deliver and the likelihood of substantial EU disallowance. Defra should identify which ministers and officials contrived to agree a scenario that was a precursor to failure. (Paragraph 52)

6.  We conclude that the numerous changes to the SPS rules and late policy decisions contributed to the delay in implementation by reducing the time available to build and test systems. Defra was not to blame for all of these delays: the EU was slow to finalise the common rules of the SPS. However this should have been a foreseeable risk, as Defra should have realised that other Member States were not in such a hurry to have the details worked out, either because they were implementing in 2006 or because they were using a historic system. In addition, some of the RITA components were not able to cope with the required volumes when delivered, which reduced the amount of time the RPA had to process the 2005 SPS claims. RITA itself did not work reliably enough. Defra failed to anticipate the volume effects on their systems arising from the implications of the SPS policy for the numbers of additional landowners who could now benefit from the new arrangements. Ultimately ministers and Defra senior management must accept full responsibility for their failings. (Paragraph 60)

7.  Accenture witnesses appeared to have been well schooled in not venturing comment on matters which they deemed were beyond their contractual observations. This attitude denied the Committee an important perspective on the way the SPS project was being run from the standpoint of a company at the heart of the venture. We regard this as an unacceptable attitude from a company of international repute and which may still aspire to work with UK government in other areas. (Paragraph 61)

8.  What this supervisory structure confirms is that Defra did not simply let its executive agency get on on its own and try to deliver the SPS on time. The Department effectively established joint ownership of the project, 'warts and all'. In so doing it reaffirmed its share of the responsibility for the project. (Paragraph 68)

9.  The Committee very much regrets the former Secretary of State's attempts verbally to distance herself from the consequences of policies which she herself must have approved. Expressing annoyance or dismay was no substitute for her need at the time fully to engage in her Department's efforts to deliver the SPS on time. (Paragraph 72)

10.  The RPA did not adequately take into account the effects of losing a large number of experienced people. Lord Whitty should have acted at the time to prevent the departure of so many such staff. (Paragraph 76)

11.  The Office of Government Commerce should review its procedures and warning assessment systems which allowed a project to reach a rating of probability of success of only 40% seemingly without effective preventative action being taken. (Paragraph 96)

12.  Given the high importance of successful implementation of the SPS scheme, to the reputation of the Department and the RPA let alone to the claimants, we find it extraordinary that Defra seemed prepared merely to aim to keep the probability of success above 50% just eight months before payments were due to begin. (Paragraph 97)

13.  Defra should explain why its concerns that disallowance prevention was interfering too much with the preparations for payments were not heeded by the Agency. (Paragraph 115)

14.  The Department should indicate in detail what steps it has taken, and plans to take, to ensure that lines of communication between Defra and its Agencies are clear so that parties can be certain in the future that each has understood what the other is saying. Defra must also incorporate in its next Annual Report a section giving a clear and unambiguous account of how it is correcting its weaknesses and responding to the lessons learnt. (Paragraph 131)

15.  We welcome the RPA's live test of 2006 scheme year payments in January 2007. Defra should have demanded that such a test take place in the 2005 scheme year before it went ahead with the attempt to pay all claims. (Paragraph 142)

16.  We seriously question the decision to spend more than half a million pounds in fees to private consultants as part of the Hunter Review of the single payment scheme. The Department must publish an explanation about why use of such a sum was thought necessary and where the resources to fund the review have been found at a time when Defra has been cutting the budget of a number of its agencies. (Paragraph 143)

17.  The Committee requests that the Secretary of State continues to keep the House fully informed of progress with payments and important operational developments. (Paragraph 146)

18.  Although the move away from the task-based system is welcome, we remain concerned that the RPA is still using an IT system that was designed for a task-based system and has been difficult and unreliable in service. We require the Department and the RPA now to cost and publish details of the further IT changes which will now have to be made to overcome current problems and speed up the SPS payments process. (Paragraph 146)

19.  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. (Paragraph 149)

20.  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. (Paragraph 150)

21.  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. (Paragraph 153)

22.  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. (Paragraph 154)

23.  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. (Paragraph 159)

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