Examination of Witnesses (Questions 1-19)
LORD BACH,
MR JOHNSTON
MCNEILL,
MR IAN
HEWETT AND
MR JOHN
O'GORMAN
11 JANUARY 2006
Q1 (11.01.06) Chairman: Welcome, Minister
and a very happy new year to you. You are almost bordering on
becoming a regular in front of the Committee. I see one or two
other faces in the public section who are also regular attenders
so a happy new year to you and a happy new to anybody else who
feels that they have not had enough of it at the beginning of
the year. May I formally welcome Lord Bach, the Minister from
Defra, Mr Johnston McNeill, the chief executive of the Rural Payments
Agency, supported by Mr Ian Hewett, their operations director,
the Rural Payments Agency, and Mr John O'Gorman, who is the head
of Defra's CAP Implementation Team. Gentlemen, you are all very
welcome. Minister, you started the new year in fine form at the
Oxford Farming Conference when you said that you were taking a
close personal interest in the RPA and the question of its payments
timetable. Can we go back to when you were first appointed to
your job? Could you tell us how many meetings you have had with
officials to discuss this whole question and could you give us
a commentary on what you discussed with your officials and with
the RPA in terms of progress to date?
Lord Bach: I will do my best.
I cannot tell you the precise number of meetings but they would
be running, I suspect, into tens and twenties. It was of course
one of the first subjects that I was briefed on when I became
the Minister just eight months ago. From that time on I have had
regular meetings both with Defra officials and RPA officials covering
RPA matters but particularly covering the matter of the single
payment scheme.
Q2 (11.01.06) Chairman: What were
the main points of concern that your officials put to you in advising
you as Minister about how the RPA were doing?
Lord Bach: Are you asking in relation
to the single payment scheme or in general terms?
Q3 (11.01.06) Chairman: You can answer
the question on both those items.
Lord Bach: In general terms they
told me, as you would expect, that the RPA was doing well. It
was going through a change programme. Much the most important
thing it had on its agenda was ensuring that the single payment
scheme started to be paid in February 2006. That is after all
something that we announced we wanted to do on 19 January 2005.
A great deal of the discussion since that time has been to work
out as best we can how we can meet that February date. That was
part of the early discussion and, as time has moved on, it has
become even more part of the many discussions that I have had
with my officials.
Q4 (11.01.06) Chairman: Let us come
to the $64,000 question. Are you going to meet the deadline?
Lord Bach: The position remains
exactly as it has been for the last year which is that we are
targeting the commencement of full payments in February. That
means, as you know, in practice, definitively establishing entitlements
by the middle of the month—the date we have for that is
14 February—and beginning payments towards the end of the
month. We believe that those are realistic targets but I have
to tell the Committee that there is still a significant amount
of work to do so we are managing the outstanding tasks and undertaking
very regular reviews as to whether we remain on track. We had
one such review yesterday and the conclusion is that we should
continue to focus on the main payments. I am hopeful that we will
start the full payments by the end of February 2006.
Q5 (11.01.06) Chairman: You mentioned
the date of 14 February. What was that date going to tell us?
Lord Bach: That is to say that
the definitive entitlements are established. In other words, it
is a precursor to the payments. We need to establish the definitive
entitlement of each and every farmer who has claimed under the
single payment scheme. We need to do that in order to keep within
EU rules. Those farmers need to be told what their entitlement
is for two reasons. One, because they want to know what money
they are going to get. Secondly, it means they can start trading
those entitlements.
Q6 (11.01.06) Chairman: The reason
I ask the question about how many meetings you have had is it
is clear from what you have said you have had between 10 and 20
meetings since your appointment after the general election in
June last year. For the benefit of the Committee when, to the
best of your knowledge, did the Rural Payments Agency start work
on preparing for the single farm payment scheme to be introduced?
When did they say, "Push the button. We are off"?
Lord Bach: I believe they started
work on the single farm payment scheme not long following the
European Council's decision of June 2003, which is the great reform
decision, to change the whole system. That is when I think they
started working on it. That involves IT work and other work. This
was a huge change. The government made decisions, as I think you
know, in February 2004 as to what model England was going to follow
and that was taken on board by the RPA. There were then other
amendments that came from Europe, some I believe in April 2004;
others in October 2004, that although minor had a considerable
effect on work that had been done and meant other work had to
be done in its place. Right through that period the RPA has been,
as I understand it, extremely conscious of their responsibilities
in this matter.
Q7 (11.01.06) Chairman: Let us just
deal with the facts at this stage. Mr McNeill, would you like
to embroider upon what the Minister has said?
Mr McNeill: The immediate concern
for us with the CAP reform was the development of an IT system
to enable us to make payments under the new scheme. We were already
in contract with Accenture, a major IT supplier. That contract
was fixed in January 2003. We started discussions with Accenture
on the new scheme, as we understood it following the decision
taken in June 2003, throughout August and September 2003. We had
identified in the original contract that there was to be a mid-term
review of CAP. At that time, we had made sure that that was covered
in the contract document so that we could vary the contract with
that supplier, having gone through a procurement lasting some
18 months. We acknowledged something might well come up but we
had not expected something of such significance, I think it is
fair to say. We sat down with them in August/September. We started
to discuss the best way ahead to meet the requirements of the
new scheme from an IT perspective and those discussions continued
as more information came forward from the discussions and indeed
right through to October 2004 when we were still considering various
changes and the impact they would have on the system as developed.
Q8 (11.01.06) Daniel Kawczynski: When
the Chairman asked you, Minister, about whether the payments would
be made on time or not, forgive me if I misunderstood you but
you did not give a definitive yes to that question. Could you
tell the Committee what concerns you have as to why the timetable
will not be met? Is it a question of resources and manpower? What
is it exactly?
Lord Bach: You are quite right.
I did not give a definitive answer because it would be foolish
for me to do so. It is our intention and our great desire to start
full payments by the end of February 2006. If we were not to do
so and we were to put in an interim payment instead, that will
not be—I emphasise this—for lack of resources. Mr
Chairman, with your permission, I think it would be helpful for
officials from the RPA to describe to the Committee what are the
dangers of not having the full payments started by the end of
February.
Chairman: We will come on that because
you will be unsurprised to learn that we have a lot of detailed
questions to ask and they will cover that. At this stage, we are
trying to establish some key parameters and important background
to where we are. We will come to address those points of detail
but I want to bring Mr Hall in.
Q9 (11.01.06) Patrick Hall: Following
the announcement of CAP reform in June 2003, how many separate
details have come out of Europe on how that is to be implemented?
I believe it is a large number. When was the last one received?
An approximate answer will do. I am not trying to be awkward.
If it is 59 or 41 it just gives a general impression of when the
last one was. I think it is rather important.
Lord Bach: It certainly is.
Mr O'Gorman: The main council
tax was agreed in September 2003. There were three[1]
key, additional regulations. They came in March 2004. Since then
there have been a number of amendments to those regulations. I
put those somewhere between six and 10 amendments. The last one
I think was published just before[2]
Christmas.
Q10 (11.01.06) Patrick Hall: 2005?
Mr O'Gorman: Correct, but that
one did not have a specific impact on system design although it
could have done had we not arranged for it to say something a
little different.
Q11 (11.01.06) Patrick Hall: Enough
had happened by February 2005 for RPA to announce that it would
not be able to start making payments—?
Lord Bach: The date was 19 January
2005.
Q12 (11.01.06) Patrick Hall: Enough
had already happened in terms of the detail that was coming out
regarding the new scheme to enable you to make that definitive
statement?
Lord Bach: I should probably answer
this although I was not there at the time. I do not think it was
put as a definitive statement. Farmers wanted to know—and
they had every right to know—when it was that we thought
we would be able to pay the full payments. We were in a position
in January 2005 to say that we believed we would pay[3]
the payments in February 2006 rather than it being something definitive.
It was by way of trying to be helpful.
Q13 (11.01.06) Chairman: One thing that
everybody is concerned about is that here we are on 11 January,
20 days from the beginning of the month in which you hope, using
your best endeavours trying hard, to be able to say that by the
middle of February you will have established definitively the
entitlements. Bearing in mind you started work on this project
as long ago as January 2003, within a period of 24 days of you
wanting to announce some definitive information, you are before
this Committee unable to give us a clear yes or no. We are still
in the realm of best endeavours. When did it become clear to you,
when you took over, that you were not going to meet these deadlines?
Lord Bach: I expect as I speak
to you this afternoon that we will meet the deadlines that we
set in January 2005.
Q14 (11.01.06) Chairman: The word
"expect" harbours with it an element of uncertainty.
I had hoped that you might be able to surprise the Committee by
telling us that you were going to meet the deadlines. The word
"expect" has an element of ministerial wriggle room.
I want to know why it is that you are not able on 11 January 2006
to give us a definitive answer, yes or no, as to whether you will
meet the timetable which you enunciated earlier in your replies.
Lord Bach: Because there are technical
factors at play here which may—we do not think they will—result
in the fact that we cannot meet the full payments by the end of
February. If you will allow me to, I will ask the technical experts
to explain what they are in precise terms.
Chairman: Obviously we want to go into
that level of detail. I am going to hand over to my colleague
Mr Taylor because, as you know, the Committee unusually asked
two of its colleagues to carry out a more detailed analysis with
the RPA on a number of the issues which I am sure will touch upon
what Mr McNeill will say.
Q15 (11.01.06) David Taylor: Prior
to the system that is being introduced at the moment, the great
majority of British farmers that were in receipt of payments of
this kind would have received them in or by November of any one
calendar year. That is correct, is it not?
Lord Bach: No, I do not think
it is. There would have been about 11, if not more, different
possible subsidies they might have received. You are quite right
that some would have started in October/November of the year before,
as I understand it; some might not even have been paid by this
time in the new year.
Q16 (11.01.06) David Taylor: The
majority of the sums payable would have been paid in or by November?
Lord Bach: I cannot answer that.
I am sure someone else can. Some money would have been paid.
Mr Hewett: There is a range of
11 schemes being replaced by the single payment scheme: the sheep
annual premium, a range of four major and some minor bovine schemes
behind it, and an arable scheme. The majority of the arable claims
were paid between the middle of November and the end of January
each year. The regulatory target for paying the arable claims
was the end of January each year. As the arable scheme represented
the single, largest tranche of subsidy under the old IACS, Integrated
Administration Control System, suite of schemes—
Q17 (11.01.06) David Taylor: I am
sorry to interrupt you. You were very helpful to us when we visited
Reading but the point I am making, I hope, is that the majority
of funds that would be paid to English farmers would have been
paid to them by the end of November or thereabouts.
Mr Hewett: January is the correct
answer.
Q18 (11.01.06) David Taylor: I stand
corrected on that. One of the reasons why the English farmer eventually
accepted the pattern of payments that was painted for them by
the government was that the payment window started in early December.
We have heard today from the Minister that we seem to be sliding
from a position where we were going to start paying 1.6 billion
to eligible claimants from early February 2006. Now we seem to
be struggling even to make definitive payments to them by the
end of that month, which is three months into the window that
was defined. I wonder what the Minister thinks, with the wonderful
benefit of hindsight, could have been done to avoid British farmers
being in this parlous position?
Lord Bach: I am disappointed too.
I would have liked us to have been able to pay the money on 1
December of course. I should point out in fairness though that
the window that the EU allows is from 1 December to 31 May. That
is a seven month period.
Q19 (11.01.06) David Taylor: It is
a six month period.
Mr Hewett: Seven months.
Lord Bach: I think it is seven.
It is the start of December—
Mr Hewett: To 30 June.
Lord Bach: Forgive me. It is three
out of seven really. The reasons why are quite complicated and
complex but let me deal with one or two of the simple ones.
1 Note by witness: this should be "two". Back
2
Note by witness: this should be "after". Back
3
The Rural Payment Agency Press Notice 03/05 of 19 January 2006
confirms that "most probable date for payments to start is
February 2006". Back
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