Examination of Witnesses (Questions 125-139)
MR DAVID
FURSDON AND
PROFESSOR ALLAN
BUCKWELL
8 MAY 2006
Q125 Chairman: Good afternoon, ladies
and gentlemen. Welcome to the second of our evidence sessions
on the Rural Payments Agency. At the outset, can I apologise that
we are a little thin on the ground on this side of the table.
One or two colleagues have had some transport problems in getting
here and one or two may have to go at short notice to take part
in a debate, but we will do our best to get into our questions
as quickly as possible. To that end, may I welcome, on behalf
of the Country Land and Business Association, David Fursdon, their
President, and Professor Allan Buckwell, their Chief Economist
and Head of Land Use, and move straight to a very simple question.
Could you sum up, for the benefit of the Committee, who do you
think is to blame for the present mess, in terms of the RPA and
payments to farmers?
Mr Fursdon: I would say that the
management of the RPA primarily, and it is difficult for us to
know whether that blame would attach also to Defra without knowing
more about the command and control mechanisms between Defra and
the RPA.
Q126 Chairman: Right. Some people
have said that part of the problem was the move to the dynamic
hybrid model, with the complexities versus the historic model
that it brought. What was your reaction when, after all the discussions,
as I would see it, where the historic model had been the one that
was most talked about, Defra went for the dynamic hybrid?
Mr Fursdon: I would say that we
had had difficulties within our own Association as to exactly
what answer we wanted, and we had had a lot of debate and we had
tried to do it as democratically as we could. I would say that,
in that it reflected the fact that there would be a regional element
to it, we were not dissatisfied with that, but the proposal that
we had put forward did take account of some historic element to
it, we called it HARC, which was a combination of the two, and
so obviously there would have been some of our members that would
have been disappointed that there was no historic element to it.
I think that would be our view. I think that we were trying, throughout
this process, to be sensible and to read the tea-leaves, and I
think that it is wrong now, with the benefit of hindsight, to
say that everybody thought it was going to be a historic system,
that was what everybody was counting on. If I remember correctly,
there was really quite a debate, particularly from the environmental
groups, who were keen to have an area-based system, for the logical
reason that if you were going to be looking after the environment
as your quid pro quo then actually looking after all the
land made sense, as opposed to looking after part of it.
Q127 Chairman: Can I interrupt you
and ask you, some people have fingered you, that is the CLA, as
being the authors of the complexity, and therefore, by definition,
the downfall of the present system. You have made it clear that
you had your own version of the payments system, a sort of static
hybrid model. Did you have any bilaterals with Defra Ministers,
outside the implementation stakeholder meetings on this, to make
your case, and why do you think yours is a better system than
either a historic system, full stop, or the dynamic hybrid?
Mr Fursdon: Certainly, I am happy
to answer that question. One of my slight concerns, however, is
that I am very happy to look at this, but it does seem to me that
by concentrating on this too much we are in danger of actually
giving it more importance than perhaps it had; but I understand
that.
Q128 Chairman: I am just giving you
the opportunity to defend yourself from having the finger pointed
at you as the authors of the problem?
Mr Fursdon: I am very happy to
do that and, in fact, it quite amuses me that people suggest that
we have such influence that whatever we come up with is the one
which immediately is taken up by the Government and introduced;
however ... Allan, I do not know if you would like to come in;
you are somebody who was involved. The question about quite how
we got to that, in terms of bilaterals, and so on, I do not remember
any particular bilaterals about it.
Professor Buckwell: No. First
of all, in principle, if we are changing the purpose of the payments
system, it is not at all surprising that the basis and the beneficiary
group would change. The arguments that the most decoupled payment
is an area-based system, a system which is paying for land management
ought to pay for all land management, not just bits of it, and
ought to pay it at rates of payment that are roughly defensible,
so that there are very strong reasons as to why, in the long run,
you would move to an area-based system if you have accepted that
we have moved away from an agricultural subsidy system, the CLA
was well apprised of those arguments and sympathetic to them.
The question then becomes the practicalities and speed. That is
why we argued that to move immediately to an area-based system,
which incidentally no Member State of Europe has done, it is done
only in the new Member States where they are not replacing a historic
system, would have been hugely painful because of the redistribution
effect on livestock particularly. There are such wide discrepancies
in the historic payment rates per hectare, particularly for beef
and cattle producers, some very high, some very low, that moving
to an average would simply destroy those businesses if you did
it very rapidly. Therefore, our answer was to at least signal
that we have got to move in that direction in the long run by
regionalising the arable payments, but for the time being, in
order to get a system up and running, to stick to the historic
distribution for livestock, and, admittedly, that was, if you
like, a political compromise within the CLA. We had no special
meetings with Ministers, because we do not get them; we were part
of a stakeholder, active debate on this which took place over
about a year. It is absolutely untrue to say that the only voices
were talking about historic; only the farming voices, the farmers'
unions, were arguing about historic only, but the more far-sighted
and wider-looking organisations were seeing that there were other
arguments that had to be in play.
Q129 Chairman: Your alternative model
was more about what you thought was best for distributional effects
and to get the system up and running, rather than something that
was guided by an insight into the organisational complexity of
alternative models?
Professor Buckwell: The organisational
complexity was not a factor in our decision, because we could
not know and did not know and still do not know, and we hope that
your Committee will bring this information out, what the requirements
on IT systems and on management systems were. I have to point
out that in Germany, which is implementing a dynamic hybrid over
all of the Länder, over 16 or 13 regional schemes,
it managed to make 80% of payments by last December. That points
the finger very clearly. This is nothing to do with the system
of payments chosen, it is to do with the capability and the ambitions
to map land and to administer an IT system, and we have got a
fraction of the number of applicants that they have. We tried
over the weekend to get data on the extra number of applicants
that they have had and managed and the extra amount of land. We
have not got that, but we will certainly communicate it to the
Committee if we can track that down. These are excuses. Your first
question was "Who is to blame?" The answer is the management
and the IT system that was put in place. This is not a very demanding
task, to measure a few fields of 120,000 people and dish out some
money within 12 months. It does not sound like something that
ought to grind a government department to its knees, and yet apparently
it has.
Chairman: We would certainly be very
interested, if you were able to throw any light on the fact of,
seemingly, some of our questioning will elicit later on, Defra
"taken by surprise" by the number of applicants over
and above their existing volume of recipients, in terms of a new
payment scheme. Clearly, some of the issues surrounding the definition
of agricultural land would be very interesting to explore, so
any information from the German context would be helpful.
Q130 David Taylor: You said that
you are surprised that people credit you with influence which
you do not have, and you have sort of rebutted the suggestion
of the TFA, in particular, that you had pressed Defra for a list
of potential models which could be used to implement the SPS?
Professor Buckwell: We certainly
pressed them for that.
Q131 David Taylor: Which included
hybrid models?
Professor Buckwell: Of course.
This was a very unusual Regulation. Instead of just defining the
end point and how to achieve it, it gave a huge range of choices,
and it seems perfectly rational that stakeholders would want to
hear from Defra, the Department responsible, what those real options
were and what their pros and cons were.
Q132 David Taylor: Despite your perceived
lack of influence—that is your perception, not mine—in
relation to Defra, how did you go about the discussion on hybrid
options then; did you suggest that your membership might be positively
disposed towards certain of them?
Mr Fursdon: I chaired our Executive
Committee at what was one of the most difficult Executive Committees
I have chaired, where we were trying to decide on policy and we
were informed by Allan and others who had been around the country
on road-shows, we had done a questionnaire in a magazine, and
so on, and we had a good debate about it. It is quite interesting
this line of questioning now, which is, to some extent, how much
did the choice of system affect what has actually happened. We
were working on the assumption that whichever system was chosen
the RPA would be able to implement it, and we were never given
any indication that the resources would not be available and the
management capability would not be made available to implement
whatever was suggested. At the time, in whatever way one may look
back at it now, whether or not we would actually get it to work
was not one of the subjects which were being discussed. We were
discussing how we could square the circle of those people that
wanted to reflect something for the historic element—Allan
has just explained the difficulties on the livestock, and so on—with
the fact that we read the tea-leaves on the way in which it was
going, the way in which the environmental groups were arguing,
the way in which even the Government, in its attitude to the CAP,
was going, which is that you are actually going to have to justify
what you are doing longer term. It was a combination of those
things. Yes, we actually asked and we wanted to know what all
the options were, and at the end of the day we came up with our
own option, which is the HARC option, which was not the one that
was chosen but was one which we put together actually to try to
find our own way, as an Association, with the diversity of views
within our Association, as to the way forward.
Q133 David Taylor: Until deep in
the process, it seemed to you that Defra were going to be making
a choice between historic and area bases, so it was a surprise,
was it, that a hybrid emerged? Should they have consulted specifically
on a particular hybrid option, in fact, the one that they chose,
do you think?
Professor Buckwell: We would have
preferred that, and we understand in the final throes the NFU
were quite close to that process, they were actually involved
in the final stages of the phasing of the dynamic portion and
handling regions. I have to say, they did not make a tremendous
success of that, because the two regions announced had to be changed
into three very rapidly.
Q134 David Taylor: There was not
widespread consultation on this?
Professor Buckwell: No; we were
certainly not part of that.
Q135 David Taylor: You had not been
in negotiation with an important player?
Mr Fursdon: We were not party
to that.
Q136 David Taylor: Should you have
been?
Mr Fursdon: We would have liked
to think we would have been, but we just accepted the fact that
we were not invited in to discuss that.
Q137 David Taylor: We had evidence
from the NFU, I cannot remember, Chairman, whether this was written
or oral, and they said that the Regulations would not have allowed
for a dynamic hybrid that started with a combination of 0% area
and 100% historic, which, looking back a little bit, seems likely
to have been implemented with more success than the hybrid that
we have landed with?
Professor Buckwell: Most of the
problems that we have run into are not specifically with the new
people that are brought into the scheme by choosing a hybrid.
Q138 David Taylor: It is not connected
with the roots of the problems, and we heard some interesting
comments from you earlier and we shall hear some more in a moment
or two, it is whether or not you feel, as the NFU did, that the
European Commission would not have allowed a combination of zero
area and 100% historic in the first year, that they wanted to
see some step forward on a hybrid?
Professor Buckwell: I have no
idea if that is the case or not.
Q139 David Taylor: They were quite
straightforward and certain about that. Would that have been a
simplification, Professor, or do you think that it would have
led to fewer problems of the sort we have seen?
Professor Buckwell: No, I do not
think so. The problems that we have got, we have got a deep-seated
problem in registering and mapping land, that is fundamental,
and the management systems around that and the fact that it was
decided to manage this process on a tasked basis rather than a
case-by-case basis, there were decisions of that kind, which condemn
the process to disappear into perplexity, which we are still trying
to unravel. Given that we were going to be mapping a huge amount
of land in a new way, digitising these maps, this was going to
run into problems whichever system had been implemented, is our
gut feeling, and there is no requirement that because you had
chosen this particular hybrid it was guaranteed to fail, because
other Member States have shown that is not the case.
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