Examination of Witnesses (Questions 40-59)
MR RICHARD
MACDONALD, MR
MARTIN HAWORTH,
MR REG
HAYDON AND
MR GEORGE
DUNN
24 APRIL 2006
Q40 Mr Drew: Perhaps we can move
on to the issue of the dramatic increase in numbers of potential
claimants. I have been very interested in this because nobody
has yet been able to tell me, apart from those people who kept
horses, who this now increased group by 50% of the total are.
Can you tell me?
Mr Dunn: From our perspective,
there were two principal groups. Certainly those individuals with
horse grazing, pony paddocks, were by far the bulk of that group
of 40,000, but also, as I alluded to before, there was a new group
of claimants—people who would have previously let land for
grazing purposes to a tenant to graze sheep maybe on a grazing
licence, or what is called a profit of pasturage basis, or on
an informal basis where you are allowed to keep sheep there on
some form of oral agreement—and all of a sudden this new
system opened up the opportunity for the owner of that ground
to be the claimant for the Single Farm Payment, and the user of
that ground, ie the grazier or the person with the crop on the
ground, not to be the claimant. So in previous years for the sheep
annual premium and the beef special premium and the arable area
payments it was the person who was actually doing the arable,
the sheep, the beef who was the claimant, now it was a new category
of claimant created by people who owned the land, did not necessarily
farm it themselves but had some responsibility for the cross-compliance
of that ground. So they were new applicants as were the horse
owners, and that is where the bulk of the 40,000 came from.
Mr Haworth: There were some other
categories, and they would be fruit and vegetable producers who
also were not making historic claims. So people who grew just
fruit and vegetables who did not have cereals. People with outdoor
pigs would be another one. By the way, we talk about pony paddocks,
there are some pretty big pony paddocks; we are talking about
the Newmarket Stud with 2,000 acres which is now claiming.
Q41 Mr Drew: At what stage did you
become aware that we were not just talking about 80,000, but potentially
talking about 120,000 claimants? Given, of course, the system
is that you have to get the wedding cake to divide it up, at what
stage did you become aware that not only were we dealing with
a complex system but dealing with a system which would involve
many more people than presumably originally anticipated?
Mr Dunn: As soon as the Secretary
of State had made a decision to go for a dynamic hybrid, which
would end up as a regional average payment, we knew that everybody
who had any land at all would be trying to get into the system
in order to get on to the treadmill to get up to that 100% regional
payment.
Q42 David Taylor: You knew it and
you stated it publicly?
Mr Dunn: We did. It was confirmed
on 2 November 2004 when Alun Michael announced that horse graziers
could enter freely.
Mr Haworth: We could not work
out how many there would be, we did not know there were 120,000,
but what we did know was the potential land area which could be
claiming it. I have to say that probably 120,000 would have been
beyond our expectation but we did know that about 9% of extra
land would be claiming and so it has proved. This was stated repeatedly
in the stakeholder meetings, in particular by the agricultural
valuers who are not here today who said time and again, "If
you operate a system based on land, then you will get more land
coming into the system."
Q43 Mr Drew: Did Defra realise that
this was a sequitur of their original decision, or did they then
go back? There is something about going to the Agricultural Council
to get clarification on what we meant by a land holding. Also,
did they ever talk to you about a de minimis level, because
some of these payments are going to be, let us be honest, very
small and are going to completely grind the process down even
though, without being pejorative, most of the people do not need
the money, do not necessarily want the money other than they are
now being told to claim? Where are we in the dynamics of the dynamic
hybrid?
Mr Haworth: I did make the point
earlier that the regulation says you cannot deny anybody who has
0.3 hectares from claiming. Our point is, had they known they
were going to introduce such a system in England, they could have
argued within the Council for getting that de minimis up
to five hectares, let us say, and that would have significantly
reduced the burden they are faced with.
Q44 Chairman: Can I, for the record,
make certain that the "they" you are talking about is
Defra ministers?
Mr Haworth: This is probably not
something which would have been dealt with by Defra Ministers,
this is a technical issue which would have been dealt with in
the special committee on agriculture or the other special committees
which were set up to talk about the technicalities of the CAP
reforms.
Q45 Chairman: Can I pin you down
further? Would it not be reasonable to have expected that when
ministers decided on the dynamic hybrid model that the people
to whom you have just adverted, namely on the technical committee,
would have or would have been in a position to have advised ministers
of the implications of the decision that they were taking?
Mr Haworth: That must be the case,
yes, although obviously we do not know that.
Mr Dunn: Chairman, there was quite
a discussion through the stakeholder groups following the announcement
of the hybrid system about the sorts of land uses which would
be permitted on land within the scheme. I remember there was a
long list of land uses which the CLA put together—would
clay pigeon shooting be included, would off-road cars be included,
would grazed orchards, would horses be in. So there was a need
to clarify with the Commission what was meant by "a farmer"
under the terms of the regulation, and a farmer was somebody who
was keeping land in good agricultural and environmental condition,
and some of those uses were therefore ruled out but some were
ruled in. So grazed orchards came in, horses came in, but some
of the other non-agricultural uses were clearly out.
Mr Haydon: One of the things Defra
forgot was that in the horse sector, which is a very large sector
of the industry and it is a growing diversification within agriculture
and people are encouraged by Defra to do this, there are very
professional bodies who run this. I can name one or two—the
Thoroughbred Breeders' Association, the British Horse Society—and
they very quickly got in on this act. I have a wife who is interested
in that sector and she was deluged from all sorts of organisations
saying, "You can join. Now is your chance to get on the bandwagon."
These leaflets were pouring through my door and I was trying desperately
to keep the wife out of it!
Chairman: Very wise!
Daniel Kawczynski: This is a very personal
question for me.
Chairman: It is not about your wife,
is it?
Q46 Daniel Kawczynski: It is actually!
Until we moved to Shrewsbury last week, my wife was the owner
of an equestrian centre and she was in a very similar position
to Mr Haydon's wife in the fact that she was deluged with information
saying, "You are now entitled to these payments". She
had a 42-acre equestrian centre and it takes a lot of time in
running that. Certain Labour councillors in my constituency have
criticised her very publicly and said that, by claiming this,
she is preventing poor farmers from getting their payments. Can
I ask you, is that the case? I am prepared to put my wife and
my reputation on the block here. Is it true that the people who
have claimed, therefore, for their equestrian centres, have stopped
poor farmers getting their payments?
Mr Dunn: I do not think you can
blame individuals for getting onto a system that was made available
to them to use. You cannot have half as many claimants again in
a complicated scheme that has never been run before with a computer
system that has never been tested before, with some of those 40,000
being very small indeed, much below the 42 acres we are talking
about in your case, without having a major impact on the way in
which that scheme is delivered. The mapping, the registration
of those people as new customers, the digitisation of all the
parcels on those holdings, the sending in of those application
forms, the validation of those claims, all of that, if you take
half the number again, must have had a huge impact on the ability
of the RPA to cope. I would be interested to know where the break-even
point was in terms of the money that they were paying out to those
individuals compared with the cost of processing those applications,
and I imagine it would be somewhere nearer to the top of the 40,000
smallest claimants.
Mr Haydon: What they could have
done was kept those people separate, because when we got into
desperate trouble over these payments, in the meetings that the
three organisations have had with the minister it very quickly
became apparent that one of the easiest ways of freeing up the
system was to take the horse people or the pony paddocks out of
it. That is basically what has been done. A lot of them were paid
early in the system, only because it was convenient to do; they
were small claimants, they were easy, there were no great problems.
If you have 42 or 50 acres or less, it is fairly easy to check
that compared with a farm of, shall we say, 350 with all sorts
of other problems. They got paid quite quickly, or some of them
did, but they created a log jam. When we got deep in with the
minister and said, "Look, something has got to be done or
nobody is going to get paid until October", Mark Addison,
who is the new person in charge who seems quite competent, said,
"We will put these on one side", and that is what they
have done.
Q47 Mr Williams: Just to check if
my understanding is correct, new applicants could also be specialist
sheep farmers who could have claimed the sheep annual premium
without filling an IACS form in and specialist dairy farmers who
could have operated and perhaps just used the slaughter premium
without an IACS? How many specialist sheep and dairy farmers would
be amongst the 40,000?
Mr Macdonald: The vast bulk of
these people are very small holders.
Q48 Mr Williams: How many of the
40,000 are specialists in dairy and sheep?
Mr Dunn: It would not be that
many. I have not got the figures, but it would not be that many.
It is not just the specialist boys, it is the specialist ones
who did not fill an IACS form. Of course, the specialist dairy
boys would have filled an IACS form out in 2004 to get the dairy
premium in the first year, so you are talking about vanishing
small numbers in comparison to the total that came in with pony
paddocks and other land.
Q49 Chairman: I want to move on in
a second to your observations about the IT system, but to conclude
on this, Mrs Beckett said at Defra Questions last week effectively
that Defra could not have predicted the volume of additional claimants;
is that a fair claim?
Mr Dunn: I do not think she could
have predicted the 40,000 new applicants that turned up on her
doorstep but, as Martin said, the CAAV, us and the NFU were predicting
from the word go that any system, which includes a regional basis
to it, will mean everybody with a bit of land will be wanting
to get in on the game. There was at least at that stage an understanding
that there would be a lot more people banging on the door than
there were originally.
Q50 Chairman: Did anybody make a
cockshy as to what the extra number of claims might be over and
above the number of claimants, for example who had been paid under
the old IACS system?
Mr Haydon: I do not think so.
I think they got the shock of their lives when it turned out to
be 120,000, that is what I think.
Mr Dunn: They were certainly pretty
shocked.
Mr Haworth: We knew the land area.
Mr Macdonald: We knew it was 9%
and certainly we were saying, "This is not going to be a
four-figure number of people, it will be five figures".
Q51 David Taylor: While we are in
the area of IT, obviously volume does have a significant impact
on the capacity to deliver new information systems, would it have
been possible—do you agree with me perhaps, Mr Macdonald—for
Defra to have taken one or two small sample areas in the country,
to survey them in some detail to find out numbers that would result
from those typical areas and then aggregate them to something
which would approach the sort of scale which landed on her doorstep,
to use your phrase? Would that have been possible in theory?
Mr Macdonald: Yes, it would have
been possible. We had to make a number of assumptions as to the
test that Defra had applied in order to assure itself that it
could go down this route. I think you need to view us in the position
of people who are outside the system but making forewarnings about
what could and could not happen, asking questions and giving reassurances.
A constant reassurance that we were given throughout all of that
period was yes, it was being taken seriously, yes, there were
concerns, yes, they understood the complexity, but it would work.
You have seen those same reassurances yourself.
Q52 David Taylor: I forget which
one it was, Chairman, but one of our witnesses said earlier on
or suggested that the 0.3 hectare de minimis could have
been lifted to five hectares. Was there any estimate made of what
that might have done to the volume of claimants, had there been
that de minimis, approximately?
Mr Macdonald: No, to my knowledge,
I do not think so.
Q53 David Taylor: If there is such
information, it would be useful to receive it in writing at a
later time[8].
You said—and this was you, Mr Macdonald—earlier on
and you just referred to it almost in the same words a moment
or two ago, that you were assured that in relation to the complexity
that there would be a high level of intervention by Accenture
and everything would be okay. I am paraphrasing you accurately,
am I?
Mr Macdonald: Yes.
Q54 David Taylor: Who is the "they"
who gave you those reassurances?
Mr Macdonald: I would have regular
meetings with Brian Bender, the Permanent Secretary, at those
meetings and indeed I would imagine at every NFU meeting at every
level we would have asked the question about the ability of the
IT system to deliver. You will remember, Chairman, you alluded
to us being through and scarred by the cattle database and various
other exercises, so we were concerned about the ability of this
to deliver. The meetings that they were having in Accenture I
know were at the very highest level—no doubt they will say
this when they come to give evidence to you—and I seem to
recall that the vice-president of Europe, or whatever his title
at Accenture was, was being flown in on a fairly regular basis
to give reassurances. It was not just being dealt with at a local
UK level, to my knowledge. When you are given assurance after
assurance, at some stage you either have to believe it, find another
tack or give up.
Q55 David Taylor: I am not suggesting
for a moment you do that. I am just trying to find out who gave
you the assurance. You are suggesting Brian Bender or the senior
officials?
Mr Macdonald: Brian Bender, of
course, was Chairman of the Management Board of the RPA.
Q56 David Taylor: In October 2004
there were details of the CAP implementation regulations published,
and the RPA have said to us because of that publication they had
to make 60 different changes to its IT systems. I am not asking
you to confirm that, they will when they appear in front of us,
but that is highly likely to result in a very substantial amount
of effort in terms of tailoring a large-scale IT system but, if
you could form an opinion re the RPA, did you feel they had got
the necessary in-house resources to accommodate that scale of
change that was happening at CAP level?
Mr Macdonald: I think one needs
to distinguish, when you talk about resources, between volume
and skill, and the assurance that we were given both by the then
Permanent Secretary and by RPA was that they had the people to
deliver this.
Q57 David Taylor: Or Accenture had
the people?
Mr Macdonald: Between them, collectively.
I am afraid I cannot tell you exactly who did which bit of which
process but that was there. You would imagine at the time because
of our very deep concerns about this—to come back to your
point of passion, there is a huge amount at stake on this and
we are very deeply concerned about it—that we asked that
question repeatedly. I think in hindsight what we can say is that
there may well have been the resources in terms of the number
of people but it is questionable as to whether there was the skill
there to do it.
Q58 David Taylor: Those reassurances
would have appeared in writing as well as in conversations of
the kind you are describing?
Mr Macdonald: We can let you have
that. There would have been more in meetings. I think I have said
this to you before, Chairman, that I have regular meetings with
the Permanent Secretary; they are not always recorded. I keep
notes of those meetings but they are not verbatim, I am on my
own on this.
Q59 David Taylor: Are they deliberately
not recorded?
Mr Macdonald: No, I do not have
the ability to write and talk at the same time.
8 The National Farmers' Union has indicated that while
this information is not currently available, once all the 2005
claims have been validated the RPA will be able to determine this
information. Back
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