Examination of Witnesses (Questions 205-219)
MS HELEN
GHOSH, SIR
BRIAN BENDER
AND MR
ANDY LEBRECHT
15 MAY 2006
Q205 Chairman: Good afternoon, ladies
and gentlemen and welcome to a further evidence session of the
Committee's inquiry into the Rural Payments Agency. May I particularly
welcome, and thank for coming, Helen Ghosh the recently appointed
Permanent Secretary of Defra? May I also thank Sir Brian Bender,
the former permanent secretary, now Permanent Secretary of the
Department of Trade and Industry for being willing to come to
talk to the Committee and also Mr Andy Lebrecht the Director General
for Sustainable Farming Food and Fisheries? The Committee is in
an unusual position at this stage of its inquiry in that the ministers
at various times over the introduction of the single payment system
have effectively all left the Department. Lord Whitty, who was
associated with the authorship of the policy, is no longer in
the Government, the noble Lord Bach who took over has also left
the Government and the former departmental head, Margaret Beckett,
is now the Foreign Secretary. So in a way, if these are the survivors
of the shipwreck of the RPA, we have three people in front of
us who are uniquely informed about exactly what has gone on. I
hope, before we start asking you some questions, you will understand
that we are approaching this particular inquiry in a genuine spirit
of trying to understand where the difficulties which have beset
farmers with their payments actually came from. Some people have
asked us whether we are out to get anybody. Well the answer is
no, we are not in that business: we are out to find out factually
where something went wrong and, if necessary, where responsibility
lies. We very much hope that our witnesses before us today will,
as they always have when they have been before the Committee,
speak with candour and indeed knowledge to try to help us through
and find out the facts as far as this is concerned. Now Helen
Ghosh, I understand you want to make a short statement before
we go into question and answer and the Committee would be delighted
to hear from you.
Ms Ghosh: Thank you very much.
May I just say first of all that I should very much like to echo
what you said about the importance of discovering the underlying
reasons for what went wrong in terms of delays on payments to
farmers, because obviously we here, Brian as well in terms of
his overall governance responsibility within Government, have
an enormous interest in this; in a sense, if you were not doing
this, of course we would be doing this ourselves. We too very
much hope to learn from this experience and I hope you will find
us answering your questions with the candour you suggested. First
of all, thanks again very much for the understanding you have
shown in terms of the witnesses who are appearing before the Committee
and, in particular, for delaying the appearance of our RPA colleagues
who are busy down in Reading and elsewhere trying to sort out
the issues. Secondly, on behalf of my Secretary of State, I should
like to reiterate the apology for the distress that the delay
in payments has caused to the farming community. As you know,
David Miliband, as one of his first statements on arrival in his
new job, was to make that point. I thought it might be helpful
to the Committee to let them know today's position on payments
as a context for what we are going to discuss. We have now made
58,700 full payments to claimants which totals £553 million.
We have made 31,000 partial payments to a total value of £734
million; those are the partial payments which represent 80% of
the claim. So as of today we have paid out £1.287 billion,
which we estimate is about 85.8% of the total to be paid out.
That leaves us, by fairly simple mathematics, with around £213
million left to pay, if we assume the total fund is about £1.5
billion. We of course have a number of groups of claimants who
have not received either a full or a partial payment on whom the
team at the RPA is now concentrating. About 5,000 of those are
owed more than €1,000, about 21,000—these figures are
a bit approximate because of overlaps in category—are waiting
for payments of under €1,000 and we are currently in the
process of discussing with the Secretary of State and ministers,
our policy in terms of trying to get those payments made as quickly
as possible. As you say, at the heart of today's hearing is what
caused the delay in payments beyond the target date set by ministers
and, in particular, the risk to the payment closure date at the
end of June. Just in overall introduction, I should say that in
discussion both with colleagues within Defra, with Sir Brian,
with colleagues at the RPA, it is pretty clear to me that there
is not one decision or one set of circumstances which makes the
delay inevitable. Crucially, for example, no-one involved in the
original decision to go for the dynamic hybrid model, including
the RPA who were fully involved, thought that it was undeliverable
for the 2005 scheme year and why it proved in the event so challenging
is obviously why we are here today. Finally, the previous Secretary
of State, and I am sure David Miliband would reinforce this, promised
to let you have some background papers. I currently have a list
with me, which I am happy to give to the Clerk, of around 40 governance
meetings with the Department, with the RPA and with stakeholders.
I am happy to give you a list today. We are compiling all the
minutes and papers onto a CD-ROM for ease of access and we shall
let you have that in the next few days. Thank you.
Q206 Chairman: That is a very helpful
statement. May I just pick up on a point that you mentioned there.
In terms of the papers, Lord Bach, when he made some less than
complimentary comments about the Committee's previous work in
this field, told us, when we made a request for information, that
he would sort of be the editor-in-chief and he said that there
were certain bits of information which were not in the balance
of public interest in terms of disclosure. When you have compiled
your CD, which will no doubt rise to the top of the charts as
far as this is concerned, has that sort of editorial block been
removed? Do we have a full disclosure of everything we wanted?
Ms Ghosh: You would expect me
to say what I am about to say. There will be very little editorial
action taken on the governance group minutes and I am sure we
shall be discussing those at great length these include the Ownership
Board, the Executive Review Group, the Programme Board called
CAPRI the meetings which various officials and ministers had with
stakeholders, that is clearly an area on which we shall need to
consult ministers, and where FOI exemptions begin to kick in,
which is around policy advice put to ministers. However, as far
as we possibly can we shall be as open as we can. For example,
just to give you some flavour, one of the papers which I may well
mention later on is the very detailed analysis we did in January
this year of the various risks and costs and business cases around
whether to go for an interim payment at that stage or whether
to press on for February payments. That is very detailed analysis,
which I think the Committee will find helpful. There will be lots
of very detailed stuff in there, but at the point where it transmutes
into formal policy advice to ministers, FOI considerations may
kick in.
Q207 Chairman: When you came into
post, what did they tell you about the state of the RPA? What
did you inherit? What did you see when you opened up that folder
with the briefings in and it said new permanent secretary, here
are the facts? What did you see?
Ms Ghosh: What I saw was a variety
of things. I made a very early visit with Lord Bach down to Reading
to meet the RPA top team in November last year and I got a very
strong impression there of a team which was working extremely
hard, very much focused on making full payments to claimants as
soon as possible. I also had on my desk various bits of evidence,
objective evidence. I had OGC gateway reviews, which again, although
they, as all gateway reviews would tend to do, highlighted the
risks around some of the delivery, nonetheless, they were on the
whole saying that risk management was good, there was good teamwork
between the department and RPA and that, with a fair wind, we
should be successful. I also had evidence coming from non-executive
groups. We had a non-executive member with significant project
experience on the Executive Review Group. She too, was saying—
Q208 Chairman: Could you just help
the Committee? When you talk about the Executive Review Group,
Executive Review Group of what?
Ms Ghosh: We may come onto this.
There is a hierarchy of governance. It is probably helpful to
describe this now. What we would think of in normal governance
terms as the board of the RPA is a thing called the RPA Ownership
Board, which is chaired by me and was chaired by Sir Brian before
me. It has non-executive representatives both from the Audit and
Risk Committee of the RPA and two external members who are both
farmers, and representatives from the RPA and the Department.
In terms of hands-on supervision of the change and SPS programme,
the Executive Review Group is the high level supervisory board,
again chaired by me and Sir Brian before me, with a non-executive
representative nominated by the Office of Government Commerce
and again involving all partners, the RPA, the Department and,
most of the time, Accenture as well. I had advice coming from
both of those groups about the do-ability of the project and at
that stage risk, but risk being managed well, and significant
challenges that we needed to deal with. That was the overall impression
I received of the project.
Q209 Chairman: What was the list
of challenges?
Ms Ghosh: At the heart of the
challenges we had at that stage—and we shall explore later
how we had got to that stage—I should say the biggest challenge
we had, was ensuring that the management information we were getting
about the completion of tasks, the close-down of tasks and therefore
the reliance we could place on percentage confidence for payments
being made by given dates, that was the biggest challenge and
that was something that we shall come back to later in the hearing.
Another challenge was how to balance. This is a continuing point,
another theme which will come up again and again and, for example,
the decision point in January that I referred to earlier. What
we had to do all the time and what ministers had to do was to
juggle a variety of considerations. Clearly the primary consideration
was getting payments to farmers and, as a sub-set of that, making
sure that we could get them in a position to be able to trade
entitlements, if we wanted them to do so. A secondary but equally
important consideration was the cost to taxpayers which could
be incurred through disallowance. Clearly some courses of action,
and again I am sure we shall come back to that later, we shall
be considering that too and we had to consider the simple deliverability
of any particular course of action, how certain we could be, what
kinds of confidence levels we could put on payments by particular
dates. So there was a complicated juggle to be done and complicated
analysis to be done around it and that was one of our big challenges.
Q210 Chairman: I am sure that was
the case. We shall get into some specific questions in just a
second, but I am anxious to try to establish with a little more
clarity some specifics about what you were told. When you came
into post in November, did you ask for or were you given an indication
as to when payments could actually be made?
Ms Ghosh: When I came into post
in November, we were still working on the basis that full payments
would begin in February and the kinds of discussions that were
going on then, and obviously accelerated over the next couple
of months, were the extent to which we needed to continue to develop,
and indeed ultimately implement, a partial payments option. To
cut straight to the chase, if I have a regret, but you will see
when you see the analysis we did, that it was extremely thorough,
if I have a regret now, it is to say we should have made the decision
in January to go for a partial payments option, to trigger that
contingency. Having said that, many stakeholders very early on
in my time in the Department were saying that actually they would
rather receive a full payment under a valid entitlement which
they could trade a little bit later, rather than a partial payment
earlier. Those were some of the message we were being sent, but
in November it still looked as though we should be going for a
full payment starting in February.
Q211 Chairman: Okay, we shall come
back to that. I should like to come to you Sir Brian. There was
an interesting comment in some supplementary evidence which Accenture
have sent to the Committee and I quote from paragraph five. They
said "As has been previously recognised, not least by the
Office of Government Commerce, it is difficult to implement large
scale and complex business change programmes at a time of massive
policy change". When you set out with the RPA Change Programme,
you would have known that discussions had been underway for some
time about reform of the Common Agricultural Policy and, being
an astute observer of the scene, might well have thought that
there could have been some significant changes to the way that
the CAP would operate in the future from the way that it operated
now and that those changes would inevitably have an impact on
the RPA, yet you set off on the Change Programme. With the benefit
of hindsight, would you have done it that way?
Sir Brian Bender: First of all
may I say, and I shall come to your question in a moment, that
I hope the Committee will appreciate that my knowledge of some
of these issues is already eight months' old. I shall do my best
to answer your questions as fairly and fully as I can.
Q212 Chairman: May I just say that
if there are matters of fact which you think are very relevant,
and I do appreciate how quickly in your line of business, when
you move on to something else, what was the stuff you ate, thought
and dreamt about, is suddenly deleted and you move on, I do not
mind, if you know there are papers there and you want to write
to us about it, that we have it in writing. Just because memory
is not instant, does not mean that the facts cannot be delivered
to us.
Sir Brian Bender: Thank you. First
of all, I should say the decision to do the restructuring, as
the Committee will know, was made in 2000. It was part of the
2000 spending review settlement and it was responding to some
criticisms of the Ministry of Agriculture Regional Service Centres
about the variations between them and some criticisms by the Committee
for Public Accounts. The forerunner of this Committee, the Agriculture
Select Committee, as I understand it, supported the changes, but
expressed concerns about the Ministry's capacity to deliver the
2000 changes and recommended a high quality project team be put
in charge of the implementation of the proposals, and indeed that
is what we did. The contract with Accenture, as I understand it,
was concluded as part of the RPA procurement process, indeed before
the mid-term review reforms of 2003, and therefore required some
amendment to the scope. On the fundamental question, the one you
ask, there were papers in 2003 or 2004 which examined the options
of continuing with the RPA Change Programme and super-imposing
the CAP reform single payment system on top of it or somehow splitting
it. The greater risk seemed to be, since they were a long way
down the track on the first, splitting it. We set up, as we can
describe more fully in a moment, but as Helen Ghosh described,
a lot of governance arrangements, independent reviews, checks
to look at whether the RPA did have the capacity to do it all
and I have to say, having looked at some of the material again
more recently, that we were not getting signals of a failing organisation.
So it was delivering its business as usual targets and indeed,
in one or two cases, the OGC commented very favourably on the
fact that it was both doing that and delivering the Change Programme.
We took that decision with eyes wide open, with an analysis of
what the costs and options might be and indeed it was one which
was not simply taken at official level, it was then put to ministers
for confirmation.
Q213 Chairman: Can you just help
us out? Did you have access to an independent individual who was
able to give you some dispassionate advice about all the systems
implications? You were quite right to remind the Committee of
the previous report that was produced on the RPA, which we published
in October 2003, in which we flagged up at that particular time
concerns that much of what you wanted to do with the Change Programme
and subsequently changes in the CAP was going to be dependent
on the IT side being deliverable. Who gave you that independent
advice?
Sir Brian Bender: We had at least
three sources of independent advice. The first was the chairman
of the RPA Audit Committee, who was an independent member of the
RPA Ownership Board and had an overview of systems generally,
not IT but systems generally, in the RPA and sat on the Ownership
Board. The second was somebody that Helen referred to in her intervention.
We identified somebody who was a very experienced programme manager
from the private sector, who was interested in playing a non-executive
role. She was a member of the Programme Board and of the Executive
Review Group and her role was to provide delivery assurance to
me, as chairman of the Executive Review Group; delivery assurance
not specifically on the IT. The third is of course the Office
of Government Commerce who conducted several reviews along the
way. These, as you will know, are independent peer reviews and
we conducted reviews several times during 2005; January, June
and September, and then again in February 2006 in Helen's time.
These were reviews which looked at the deliverability of the programme
against the risks. So there were a series of sideways-on, independent
looks at all this, not specifically at the IT systems as such,
but that was part of it. I do recall too, though we can check
out the details, that at one point we did have someone seconded
into the RPA from the Accenture team to look at it from the user
side rather than the suppliers side, but that obviously is not
completely independent.
Q214 Daniel Kawczynski: Just two
questions for Ms Ghosh. Firstly, Sir Brian left his position on
3 October and you took up your position on 7 November. Is it normal
that there is such a delay?
Ms Ghosh: There was no gap because
Mark Addison, who, as you know, is now just about to depart as
acting chief executive of the RPA, took over as the interim permanent
secretary. The delay was caused by the fact that Sir Brian's was
a managed move to fill a longstanding gap at DTI and mine was
an open competition. So there was that gap, but Mark Addison was
acting permanent secretary and continued with the permanent secretary
role in all the governance procedures, including monthly meetings
with Juan Domenech of Accenture. Mark fulfilled all the governance
roles of a permanent secretary and met with Accenture as both
Sir Brian did and I continue to do. There was no gap in governance
terms.
Q215 Daniel Kawczynski: Right, because
that was obviously quite a critical time in the run-up.
Ms Ghosh: It was indeed.
Q216 Daniel Kawczynski: Ms Ghosh
said at the very beginning "We shall learn from this experience".
I do not think it is an experience: I think what happened was
an unmitigated disaster. I feel very angry about it. Who are you
going to reprimand in the Civil Service or who have you reprimanded
over this fiasco?
Ms Ghosh: As you know, when the
Secretary of State made her announcement on 16 March about both
the timetable and new management arrangements at the RPA, she
also announced the move from post of Johnston McNeill, who was
the chief executive of the RPA, and his replacement on an acting
basis by Mark. That signalled two things: one was an irreparable
loss of confidence between ministers and the chief executive.
In the light of the fact that only five days before she had been
assured and indeed her colleagues had stood up in Parliament and
said that it would be possible to make the bulk of payments by
the end of March 2006 and, secondly, and this comes to the heart
of the question you are asking, which is the analysis of what
it was that went wrong, the other thing that had become clear
at that point, if I may just take you back a moment to February,
was that in February, and we must not forget this, the RPA had
hit its target and it had started to make payments. We were all
aware of the effort that had gone into that, the management effort
and the ministerial supervision effort, but they had started to
make payments. For some reason, having started to make the payments,
the whole system gummed up.[1]
I am sorry, that is not a technical IT word. The challenge for
us was trying to work out what had happened and again, it was
pretty clear that there was a lack of understanding at the very
top of the RPA in how the different elements, the IT system that
had been commissioned and built, the business processes, customer
responses, would actually ultimately all fit together. What was
happening in that period between 20 February and 16 March was
that it became clear that an IT system had been built based on
a business system which was essentially highly risk averse, contained
an enormous number of checks, there was the complicated relationship,
which I am sure we shall come back to, with the rural land register
and the whole mapping issue and the system simply ground to a
halt. Now the fact that that was not predicted by the most senior
levels of the RPA was very significant and was the second key
part.
Q217 Chairman: Let me pin you down on
that. We have just heard from Sir Brian a long series of explanations
and indeed you yourself underscored that, that there is this great
big structure, external advisers, people giving you assurances,
you all believed that it would deliver, even you yourself said
that when you came into post on 7 November it looked as though
the thing was going to work, yet we go through November and December
into January, probably about two and a half working months, bearing
in mind Christmas and the New Year, and now you have just described
a system which suddenly gums up, to use your own phrase. What
I find absolutely amazing is that, given all the professional
advice, information, checking, all the lead time you had to introduce
all of this, and we shall go into it in more detail, suddenly,
something in which you had confidence fails to deliver two and
a half months after you took responsibility for it.
Ms Ghosh: That comes back to this
crucial point about the nature of the relationships. It was neither
the role of ministers, and in one sense the various governance
bodies, nor did they have the capacity to look down at the very,
very detailed coding of the system which had been built successively
over six months, a year, 18 months or whatever it was previously.
It was that kind of predictive ability of how it will all inter-relate
when we press the button and it starts to happen. You could not
expect the governance groups that we had to be able to go down
to that level of detail. What you do expect to have is an overview
from the Agency, who should, as a delivery body, have that understanding
of the very, very, very detailed workings of the IT system. If
they say "We have this level of confidence that it will happen",
ultimately you have to believe them.
Q218 Chairman: But could you just
explain to me why it was that paragraph 31 of Accenture's further
information to the Committee tells us "RITA" which is
this great system "has been fully stable since October 2005
and is available from 6 am to 9 pm weekdays and 8 am to 6 pm weekends".
Your IT partner tells us here that it is all sorted, it can cope
with the volumes, it is doing the business and yet when it comes
to delivering it gums up.
Ms Ghosh: You will able to explore
this issue further with Accenture but it is quite helpful.
Q219 Chairman: I am exploring it
with you.
Ms Ghosh: I am trying to describe
in lay-person's terms the way that RITA works. What Accenture
is describing there is the day-to-day process of accepting applications,
doing validations, doing checks. The path of the process that
gummed up—and I do apologise for using that term—
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