Examination of Witnesses (Questions 720-739)
LORD WHITTY
AND LORD
BACH
23 OCTOBER 2006
Q720 Chairman: It might be useful
in terms of scene-setting if you could tell us, when you took
over responsibility for this in 2005, what did you find? What
were you told? When you came in and the civil servants handed
you that inevitable folder, saying, "Minister, this is what
you are responsible for. We would love to give you a more detailed
briefing on the Rural Payments Agency," what happened when
you first learned about this animal for which you were now responsible?
Lord Bach: It was clear, obviously,
from the moment I set foot in my office that this was a major
part of my responsibilities and that we had said we would ensure
payments were started by February 2006, and it was made clear
that this would take up a considerable part of my time during
the months that were to follow, and indeed, that of course occurred.
You will, I think, Chairman, have seen the list of meetings and
advices that were sent to you from the Department. I have counted
them. I had, if this is absolutely accurate, 24 formal meetings
during my 361 days in post. That is one every 15 days. I think
that is just an example of how significant this part of my portfolio
was and, to be fair to all concerned, that was made clear to me
at the start.
Q721 Mr Drew: If we can look at this,
to me, key issue of the additional people who were now included
within the new arrangement, did anyone ever try and define who
was likely to now be able to claim? I accept horticulture, because
I met the horticulturalists and they were obviously going to be
part of the new arrangement, but did anyone think of looking at
the issue of those, for example, who kept horses in a paddock,
and actually try to think through whether they were the right
people to be claiming, whether there was any ability to stop them
from claiming, given that, as you know better than me, it is the
wedding cake principle: the more people in the scheme, the less
money available for what I would define as genuine farming activities,
for whom the scheme was principally intended? Was that ever a
live discussion?
Lord Whitty: It was a consequential
issue. One of the aims of the scheme was effectively that it did
not matter how you were using your grazing land or your growing
land in 2000. You would be paid for keeping that in good agricultural
and environmental condition. So for equivalent sort of land, there
would be a level playing field. So the fact that in 2000 you might
have been growing potatoes and your next door neighbour may have
been growing a subsidised crop should be irrelevant, because the
ultimate objective was a level playing field and a positive environmental
outcome. I rather dispute the term "the people for whom this
was intended"; it was intended for all agriculture, which
includes horticulture, potato growers, and, in my view, horse
enterprises. In fact, the decision on horses related to grazing
land, not to paddocks, and quite a lot of horse grazing land was
already in the IACS system, because it had previously been or
was available for subsidised livestock.
Q722 Mr Drew: This was an active
discussion, so we are effectively redefining farming.
Lord Whitty: No, we are not redefining
farming. Some had previously been subsidised, and obviously there
is a fruit and veg regime, although there is not a subsidy attached
to it any longer. It was all in the agricultural system, both
ours and the EU system.
Q723 Mr Drew: It was not previously
in the agricultural system. Those people did not receive any subsidy.
Lord Whitty: No, but they were
in the agricultural system. There are EU regimes covering areas
which are not subsidised. There used to be EU regimes covering
pigs, where the subsidy had been withdrawn. These were like the
EU regulations covering poultry. So most of this land had at some
point been in the EU system in one form or another and in any
case, the same agricultural regulations and environmental regulations
applied to that land as to land which was being used for subsidised
activities.
Q724 James Duddridge: Lord Bach,
can I take you back to how the RPA fitted within other parts of
your portfolio? I am struggling to understand how big an element
it was, whether it was 20%, 30%, and in terms of your priorities,
whether it was in the top three, top 20 priorities. Could you
perhaps give us an idea of the percentage and prioritisation,
if it is that precise?
Lord Bach: It is not really that
precise. It is hard to do but it was clearly one of the top five
priorities, probably top three. It was important. In terms of
the time that it took, I think, as I was saying to the Chairman,
you have a list of advices and meetings that I had during my period,
and those were the official ones. There were clearly unofficial
meetings too, when someone would pop in or I would have a question.
I had weekly reports for a very long period of time and of course,
after March 14 this year I would have daily reports as to what
was going on. So it was very major in terms of my priorities.
In terms of the time it took up, that is much more difficult to
say, because some of the responsibilities that may not have been
as high a priority may have taken as long because they involved
going abroad or involved visits. I am afraid that is the best
I can do.
Q725 James Duddridge: I do not quite
understand how Ministers work together in teams, but given it
was one of the top three priorities, what were the sort of mechanisms
for review within the broader team and up to the Secretary of
State of each Minister's key priorities?
Lord Bach: In those days we had
weekly meetings with the Secretary of State. All the Ministers
met with her on a Wednesday, and Ministers were of course at liberty
to bring up any of the issues that were of the moment, but of
course, at the meetings that I held and called on this subject
there would nearly always be present a Special Adviser of the
Secretary of State plus a private secretary from the Secretary
of State's office. The advices that I signed off would nearly
always invariably go to the Secretary of State and, of course,
there would be some that I would sign off and then she would sign
off after me. So the relationship between my office and her office
I think worked perfectly adequately.
Q726 Chairman: When you took over
responsibility for this particular project, you said very clearly
that the target was payment in February 2006, that that was obviously
clear, am I right in saying, right from the word go, when you
took over after the election in June 2005? Yes?
Lord Bach: Can I remind you that
it was in January 2005 that the Department announced that we would
begin payments in February.
Q727 Chairman: But you inherited
that. What advice, when you first met the officials involved in
this, did you seek from them about the risks that had to be faced
in meeting that timetable?
Lord Bach: I think every meeting,
almost without exception, that I held would be around risk, would
be around what the Department had said would happen and whether
it would actually happen or not. I cannot recall, I am afraid,
the first, second, third meeting as they took place, but this
whole issue of whether we would meet that date to start the payments
was there really at every meeting.
Q728 Chairman: Let me ask it in a
different way. As you became more familiar with the unfolding
nature of the Rural Payments Agency and its work, what troubled
you when you left the office, when you had had time to reflect
on the challenges that the RPA were having to face? What are the
things that you recall were uppermost in the mind, the worry factors?
Every time you met with the officials you were thinking, "Is
that going to happen? Is that not going to happen?" Where
were your worry beads?
Lord Bach: Mr Chairman, like you,
I am legally trained . . .
Q729 Chairman: I am not a lawyer.
I am just a humble backbench Member of Parliament, but do carry
on.
Lord Bach: I am also a humble
backbench Member of the House of Lords, but I am also a lawyer,
and these meetings that took place were not "How nice to
see you. Have you had a good journey from Reading? Would you like
a cup of tea? What is it you've got to say to me? Goodbye."
They were meetings at which I believe I cross-examined, or attempted
to, the officials, both RPA and Defra, who would be present at
these meetings as to what it was they were putting forward to
me, and they would either satisfy me or not satisfy me with what
they had to say, and they did make it clear to me, to be fair
to them, that this was a risky enterprise, but on all occasions
it was likely that we would reach the date of February 2006 for
first payments. You will recall, I am sure, that when I appeared
before your Committee on January 11 this year, you and your colleagues,
quite rightly, pressed me very hard, I think it is fair to say,
as to why I could not tell you then whether we would meet those
first full payments by the end of February, it being only six
weeks or so away, and I held the line, if that is the right expression,
by saying no, I could not tell you because we were not sure even
then that we would be able to meet those dates. As it happened,
we did meet that date but, as, of course, is obvious, we failed
as far as the bulk of payments were concerned.
Q730 Chairman: I am intrigued about
the way that risk was managed. You clearly accept that it was
a potentially risky venture but did anybody produce any kind of
schematic to say "These are the risks in the project and
every time we have a meeting let's have a look against this list
of potentially risky ventures how we are actually doing to move
us towards the deadline"? Was it ever as rigorously done
as that or is it that you knew you were travelling a difficult
road but every time you talked to the driver of the bus he said,
"Don't worry, we're going to get to the destination"?
Lord Bach: I think it was pretty
systematic and schematic, to use your word. At the back of our
minds—at the forefront of our minds—was that we had
this date to attempt to get these important payments started and
really, all the discussions that we had around the very technical
nature of some of the issues—and the Committee will know
very well how technical some of the issues are—what I was
intent on and I believe officials, whether from the RPA or Defra,
were intent on was in trying to make sure that we could, and it
was a question of taking a judgment as to whether we would or
not. Sometimes it looked better than it did at other times; at
other times it did not look so good, but as we drew towards Christmas
of last year it began to look as if we would meet those first
payments and make the bulk of payments by the end of March. As
you know, one of those came true and the other certainly did not.
Q731 Mr Drew: Did you have complete
confidence that the Accenture system was going to work as intended?
Lord Bach: Yes, I think I did
have confidence that it was going to work. The advice I received
led me to believe that it would work, yes; that there were risks
attached to a number of aspects but that this would work.
Q732 Mr Drew: Was that because the
RPA management was confident that Accenture knew what they were
doing? Was it because your civil servants had really got in and
done some proper scrutiny of what Accenture was doing, or was
it that Accenture were directly telling you, as they told us,
that they still believed that when they pressed the button it
all worked, but it did not quite do the things that maybe they
thought it would and should have done?
Lord Bach: Accenture were not
present at all the meetings I had, by a very long way. This was
very largely with RPA civil servants and Defra's civil servants,
who would come to me with a common view, because, as you know,
there was a myriad of committees which were looking at the RPA
at this particular time. So they would come to me with a view,
and I would discuss that view and debate that view, always, as
I said, bearing in mind risk factors involved. But I do think
that, at the end of the day, some of the advice that I received
from the RPA was over-optimistic.
Q733 Chairman: Again, for the record,
and for our greater understanding of these matters, you just indicated
that there were a myriad of committees. Perhaps you could explain
what the management structure was, because it would be nice to
know who was actually in charge of the project. The NAO give a
hint that there was a shift in responsibility from a body known
as CAPRI to something called ERG, which I thought was a Continental
form of petrol till I looked and found it was an Executive Review
Group. The sense I get from the NAO report was that management
responsibility was ceded from those who were very close to the
coalface to those who were over-viewing the project. This ERG
were masterminding it. Who was actually reporting to you about
progress?
Lord Bach: I can answer your question
by saying the people who were present at the meetings generally
would be the chief executive of the RPA and his board really,
the main players on his board, or two or three of them, and there
would also be some very senior Defra officials, often the Permanent
Secretary, and others who were very senior officials in the Department.
They would all be at these what I think could be described as
fairly high-powered meetings. The people who would speak at the
committees would often be those around the chief executive of
the RPA, not necessarily him, and of course, the Defra officials
as well. But I have to say that, having chaired those meetings,
and taken a full part in them, I find it difficult to say where
the power lay really at official level. They were coming to me
with a collective view and that was a view they wanted ministerial
approval or disapproval for.
Q734 Chairman: Was there not a conflict
of interest? They were seeking your views as a Minister, but the
very people who you might have turned to in Defra, namely senior
officials with an understanding of what was happening, for advice,
were involved with the RPA in managing and delivering the project.
Are you, again, for the record, telling us that there was no impartial
point of advice that you, as the Minister responsible for this
programme, could turn to to say "Well, you understand about
complex systems. Am I getting a proper message?" It seems
to me that Defra and the RPA had joined hands to give you a view
but you did not have anybody of your own, uninvolved in either
of these two boards, to turn to. Is that right?
Lord Bach: I had the private office,
of course, and I also had, as I say, a number of unofficial meetings
that would happen during the course of a day. I might see an official
from the Department and, if I had a particular concern in my mind,
talk to him or her about that but basically, when these meetings
were held there was a common view, which had been established,
I suspect, at a previous meeting between Defra officials and RPA
officials.
Q735 Chairman: So the Defra officials
and the RPA, as you say, came with a common view, so there was
no collective tension to argue it out with you as the Minister.
They simply came along and said, "This is what we're doing."
We are going to look in a little more detail later on at some
of the issues that came up as a result of this point of progress.
Lord Bach: These meetings certainly
had tension in them because, although the Department would come
with a point of view, and I do not actually think there was anything
wrong in that at all; that is the way the civil service behaves.
They come to a Minister with a point of view that they have come
to in discussion but of course, as the discussion unravels during
the course of some of these meetings, there would obviously be
differences of emphasis between perhaps people within the RPA
and senior civil servants from Defra. They were pretty open discussions.
No-one was hidebound by a piece of advice that might have come
to a Minister before that.
Q736 Chairman: Am I right in saying
that you, in the nicest sense, in your forensic way of probing
what was happening, were left to your own devices to work out
the questions you were going to ask of this joint group who were
presenting you with the view about what was going on? You were
on your own to probe, using your obvious powers of investigation,
understanding and intelligence, but the questions asked were your
questions?
Lord Bach: By and large I think
the questions were mine, and the Special Advisers' too, but that
is not to say that Defra officials would not ask questions for
clarification from the RPA and even vice versa. These were
not meetings where it was me against the world, Chairman. I was
given a lot of advice and assistance from officials from both
the RPA and Defra at these meetings, but I have tried to describe
them as best I can.
Q737 Mr Drew: You said that Accenture
were not at many of the meetings, so where was the line responsibility
through the RPA to ensure that the system was going to work? Did
you actively take part in any prototype work on the system, given
that there were a number of changes—as we know, 23 identifiable
ones, from memory? Is this something that was crucial to the RPA,
working with yourself, with the way in which this was all going
to take place? I am confused what level Accenture played in this
mechanism of decision-making.
Lord Bach: I think the Defra official
who had most dealings with Accenture in a formal manner was the
Permanent Secretary of the day, and I think the Committee heard
that when the two Permanent Secretaries gave evidence. The RPA
of course set up as a delivery body for Defra and one of the issues,
of course, that I think arises out of all this is what kind of
role the delivery body has under an agency system towards the
central Department and then towards Ministers who are on top of
the central Department. I have to say that, as far as taking part
in prototype testing, as I think you are implying, no, I did not,
but I would receive information about what had taken place as
part of the advices that I received.
Q738 Mr Drew: Presumably, that information
was all positive.
Lord Bach: Not always positive,
to be fair, no. Sometimes things had not gone as well as had been
hoped, but the general line over that period of time leading to
my appearance before your Committee and the events that we all
know so well took place afterwards was that the RPA could fulfil
what they had said they could fulfil.
Q739 Chairman: We are going to come
back and tackle, probably in even greater detail, some of those
issues. I just have a couple of quick questions to Lord Whitty.
Lord Whitty, were you at all involved in the appointment of Johnston
McNeill?
Lord Whitty: No.
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