Examination of Witnesses (Questions 20-39)
MR RICHARD
MACDONALD, MR
MARTIN HAWORTH,
MR REG
HAYDON AND
MR GEORGE
DUNN
24 APRIL 2006
Q20 Mr Williams: The Secretary of
State said in Defra Questions last Thursday she believed that
her policy of area regional payments is the proper way to establish
decoupling. Given those cases, where do you think the idea of
the dynamic hybrid came from? What is the source of it?
Mr Dunn: It came from this list.
Q21 Mr Williams: How did it get on
the list?
Mr Dunn: It was one of the options
that was available within the Council of Ministers' regulation
which was pushed and pulled at its last moments to create various
options for various Member States to be able to cope with what
they wanted to do. I do not think from my perspective—I
do not know what the NFU's perspective was—there was any
serious consideration given to anything other than straight regional
average payments or straight history until we had seen that list
produced by Defra in October which said that there were a number
of hybrid options that could be used as well. I say again that
there was great mirth when we had the meeting on that paper when
we looked at the dynamic hybrid options. It was said by officials,
"If you really want to get things messy, let us look at these
options at the bottom of the paper".
Mr Haworth: If you look at the
ideological case for a regional payment, it is clearly a more
pure form of decoupling, and you cannot deny that. Defra were
certainly at all levels aware that going to a straight average
system would cause a great redistribution of the current pattern
of payments. They had told us that all during the negotiations,
so when there came an option which enabled them to combine those
two concerns, that is to say to move gradually to a regional payment,
I think they latched on to that because it did enable them to
square that particular circle or tension between redistribution
and ideology, but they did that at the expense of introducing
a huge degree of complexity into the system.
Q22 Mr Drew: Are you happy to make
available to us the correspondence, lobby materials and notes
on meetings relating to this key point of how we go from, obviously,
a preference for the historic system to the dynamic hybrid? Because
I am completely confused, and I think this is the crux, without
going into detail, which is the point I made in a previous briefing
in advance of this meeting. I want to be assured who came up with
this idea and who did the strategic thinking. There must have
been some mechanism whereby somebody took ownership of this and
was able, therefore, to propagate it as an answer. It may not
have been the best answer; it was a fudge, but it was a fudge
that somebody had to have done some work on. Obviously we are
asking Defra and the RPA to do likewise, but somebody somewhere
has got to be able to track this audit trail to where this idea
comes from and how somebody had to then take ownership of it.
Mr Dunn: As you can imagine, David,
our files are quite thick on this whole area, but I am sure that
we would be perfectly happy to lay them open to you to look at,
so you can see from our perspective at least what went on from
the TFA.
Mr Haydon: We would appear to
have correspondence starting roughly around 19 September 2003
when we wrote to Lord Whitty expressing our concern and there
will be subsequent letters which will follow on.
Q23 Lynne Jones: Have you got a copy
of the options paper?
Mr Dunn: We can let you have a
copy of the options paper.
Q24 Chairman: Your correspondence
files are the key ingredients, because clearly for us reading
through, not having been party to the meetings that subsequently
happened, it would be difficult to pick out the key ingredients.
In trying to understand the process, who said what to whom and
what decisions were subsequently reached, it would be extremely
helpful to have that information in the form of some supplementary
evidence to the Committee.
Mr Macdonald: Can I say, Chairman,
that of course we are very happy to do that and you can sift through
them, but I still think you may find when you see all of that,
it will be difficult to nail the precise moment and answer the
question as to who did what in terms of analysis because, from
our perspective, we were sitting outside that process and we were
clearly asking many questions—George and I, or between us,
can go through the chronology of events—as to precisely
who did what. This was very ministerially-driven in the end.
Chairman: If I may say, as you rightly
said, this is a very public process and, as Defra always sends
somebody to observe what happens on these occasions, I am sure
they will make a very careful note that this will be an area to
which the Committee will wish to return to find out the answers
to precisely the questions that you have put forward.
Q25 Daniel Kawczynski: I think all
four of you are being extremely professional, polite and diplomatic,
but that is not what we are here for. I think Mr Haydon came the
closest out of the four of you to expressing a little bit of the
frustration and passion that this total failure has caused to
farmers and yet the rest of you are seen to be almost apologists
for Defra. Personally, I feel very angry, as do my farmers in
Shrewsbury, about the way they have been treated and I would like
to ask Mr Haydon, what was your reaction when you received the
telephone call from Margaret Beckett? Did you feel that Mrs Beckett
was on top of her brief and doing her job correctly?
Mr Haydon: I think at the time
we still clung to the hope that we were going to go down the historic
route but obviously, as the other speakers have said, they were
perhaps more involved in the meetings than I was, a lot of it
was going on behind closed doors and certainly the farming public
were way out of it. I have a feeling that decisions were taken
which certainly were wrong for the industry. It is very easy to
say that in hindsight because people make mistakes every day,
but, unfortunately, what happens in agriculture—and I have
seen it many times before having been here a long time—ministers
make decisions and then ministers move on, they retire or they
go to another job and somebody else comes along has to pick up
the mess. I have got some sympathy for the present minister who,
let us face it, was not even in office when all of this was decided.
Lord Bach had nothing to do with this and he is carrying a bit
of flak now that maybe should not be really intended towards him.
There are individuals in the past and you can pick them out, if
you like. Lord Whitty was a big player in this, so was the Secretary
of State, Mrs Beckett, and various leaders in Defra who have been
named by my colleagues here. Yes, it has turned out to be a total
disaster. Where I feel strongly about it is—I am in a slightly
unique position having farms in two countries and therefore combined
the system—and you would not believe—I think Mr Williams
is from Wales and will know the same as I do—the whole historic
system which applies in Wales and Scotland is so simple, it is
unbelievable. It is a question of a few maps, which were very
quickly sorted out, tick boxes and the whole thing went through
on the nod. They said they would pay at certain times; they were
absolutely on the nail, they made no mistakes, even at the end
of it, the Welsh equivalent of the ELS scheme is terribly simple
and much easier to get into than the present one. That has shown
itself in England—and this is a little off the subject—where
only 22% of the ELS scheme applications have been taken up so
far. What we have got here is two different systems: one horrendously
complicated which has caused us enormous problems, ministers to
make promises they cannot keep and a lot of stress in the RPA;
there are many people there, and I have some sympathy for them
and the people who are in charge, trying to do a job which was
not very easy for them to do, but of course it has caused enormous
problems in the industry. As George Dunn will tell you, in our
case we were receiving up to last week up to 70 or 80 calls a
day from farmers who are in great distress, in financial problems
and so forth. It is very much akin to what it was in the foot
and mouth situation.
Chairman: We will come back to that in
due course.
Q26 David Taylor: I will put to Mr
Haydon, Chairman, that simplicity has its obvious attractions
in terms of cost, certainty and so on, but sophisticated, political
and environmental objectives do not necessarily lend themselves
to simple systems, do they?
Mr Haydon: No, but what I could
say is, why did the devolved administrations in Scotland and Wales
take it up? They obviously thought that it was going to be better
for their topography. Those two countries are, shall we say, more
on a livestock side; there is not a tremendous amount of arable
in Wales, there is in Scotland, but they went down that route
and it certainly proved the right one for them. There were some
costs which George Dunn referred to. One of the Defra people said
that the additional cost of running this scheme could be anything
between £37 and £63 million over the four years, and
after that, when it was taken up, you would still be looking at
a possible cost of £1.8 to £8.7 million. These are not
my figures, these are figures one of the Defra officials submitted.
Q27 David Taylor: I understand that
and your colleague, George Dunn, painted a very vivid word picture
of when you thought there were two options on the table, the historic
and the regional average model, and then hybrids were suggested
by the civil servants who then laughed like the robot in a Smash
advert saying that no one would surely want to follow that route.
That is what you were saying, is it not, Mr Dunn?
Mr Dunn: There was certainly great
mirth at the idea we would go down any of the dynamic hybrid options.
But let us be clear, in July, right after the 26 June decision
by the Council of Ministers, in response to a question raised
by my colleagues in the NFU, Lord Whitty said to us in terms of
implementation that simplification was the key; that it had to
be simple to implement this. I would ask, what have we gained
from the environmental, from the rural economic, from the social
aspects, of this system? I think we have lost considerably. I
do not recognise the comment that we are apologists for Defra,
for the RPA. If you want us to be passionate, we can be passionate
about the calls we are taking from our members, about the tears
people are crying, about the suicides we have had. I thought this
was a forensic investigation and we are trying to provide the
Committee with a blow-by-blow account of where exactly we think
issues happened and where they occurred. If you want passion,
we can give you that.
Chairman: Your interpretation of what
we are after is entirely correct.
Q28 David Taylor: Could Mr Dunn confirm
or otherwise that one of the hybrid options would have been to
have a dynamic hybrid but in year one to have 0% regional average
content to it?
Mr Macdonald: No.
Q29 David Taylor: Was that absolutely
verboten?
Mr Macdonald: The point that Martin
Haworth raises is, once you go into a dynamic hybrid, it has to
be dynamic.
Q30 David Taylor: It would still
roll out 100% over a six year period, say.
Mr Haworth: You have to make the
step in year one.
Q31 David Taylor: You have to make
a step.
Mr Macdonald: We could have delayed,
as Lynne Jones said.
Q32 David Taylor: It has the same
effect surely?
Mr Haworth: No.
Q33 David Taylor: Does it not?
Mr Haworth: No.
Q34 David Taylor: Why?
Mr Haworth: Because you are still
coupled.
Mr Macdonald: You would have paid
the old coupled payment.
Mr Dunn: You would still have
the Beef Special Premium Schemes—the Suckler Cow Premium
Scheme, and the Sheep Annual Premium Scheme—all those schemes
would have still operated, and then we would have made the choice.
Mr Macdonald: There are some downsides
and there were some downsides to that, and we did have a separate
discussion, "Should we seek to have this delayed until 2006".
There were a number of difficulties in that. Everybody knew what
the decoupled system was, and we would have had land stagnation,
we would have had an inability for transactions, we would have
had a system which was agreed in 2003 but not implemented for
three years. If I can go back to an earlier point, we feel hellish
passionate and frustrated about this by every phone call we get.
The forensic point on this, and I think we are just trying to
answer your questions factually, is that we did make very clear
in the autumn of 2003 and the beginning of 2004 that we thought
it was wrong to go to a dynamic hybrid. We thought it was right
to stick to a historic model for a variety of reasons and we did
point out this would be hugely complex. But, and this is a constant
which runs throughout this, we were constantly being reassured
that the analysis had taken place and that it would work.
Q35 Chairman: You said you made representations,
to whom did you make them and what kind of reply did you receive?
Mr Macdonald: To the Secretary
of State, to Lord Whitty.
Q36 Chairman: Was that by means of
correspondence or meetings?
Mr Macdonald: I am trying to think.
If there is correspondence, you can see it all, but certainly
in meetings.
Mr Haworth: And in our formal
submission to the Defra consultation.
Mr Dunn: From our perspective,
we spoke to Uncle Tom Cobbley and all. Whoever we felt had an
influence on this issue, we spoke to, we wrote to, and we dealt
with it in meetings and in correspondence.
Q37 Chairman: Can I clear up one
point? The National Farmers' Union was not an entirely united
house when it came to deciding the type of system of payments.
Were you in fact authors partly of your own downfall in that your
Horticultural Committee, under the leadership of Mr Graham Ward,
ran a passionate campaign to seek payment for land which hitherto
under the historic payment scheme, if I have understood it correctly,
would not have benefited, but under other schemes was brought
into payment? Clearly within the realms of the NFU, you were unable
to resolve a policy difference between two parts of your organisation.
Did that inhibit your ability to try and achieve what you thought
was the simplest system or did you in fact introduce complexity
by virtue of default?
Mr Macdonald: I think in part,
Chairman, you have answered the question yourself. Clearly that
passionate campaign, as you have put it, did occur. The NFU had
a very thorough debate about this, looking at all the ins and
outs of it. At the end of that, we had a council meeting, the
council were asked to determine which way it wanted to go and
we clearly and very unequivocally stated we wanted to go for historic
payment. As Martin Haworth says, that was our submission. Ben
Gill, who was president at the time, made that point to the Secretary
of State and, as George says, we repeatedly made that to Uncle
Tom Cobbley and all.
Q38 Chairman: Just to be entirely
clear, the NFU's official policy position did not agree with the
group led by Mr Ward? Your official position was of one of straightforward
simplicity, historic model, full stop?
Mr Macdonald: As you know, Chairman,
there are many different interests in the NFU so often there are
debates in the NFU, but the ultimate position taken after that
debate was the single position that we should go for historic
payments.
Q39 Chairman: So we have the horticulture
group and the CLA, who in your judgment, if I have understood
it correctly from your earlier evidence, were campaigning for
an alternative model, and unanimity amongst the TFA and the NFU
about the historic payments scheme?
Mr Macdonald: And the environmental
groups.
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