Examination of Witnesses (Questions 780-799)
LORD WHITTY
AND LORD
BACH
23 OCTOBER 2006
Q780 James Duddridge: I am struggling
to analyse the information because there are two sets of information:
one set I have heard that says ministers and senior officials
were so involved in the detail that there was not a sufficient
check mechanism, and another set that says they needed to be more
detached to give oversight.
Lord Bach: I think that is a dilemma
for ministers, to be honest, with the Agency system as it is.
How involved should ministers become? Should they spend all their
time acting as a kind of check on the details that they are being
given by those who are technically expert or should they on the
other hand stand back and say, "You sort it out among yourselves,
boys, and then at the end I will look to see whether you have
done it right or not"? I think getting that balance correct
is extremely hard. Speaking personally, I have learned quite a
lot of lessons from this rather bitter experience.
Q781 Lynne Jones: What are they?
Lord Bach: As Lord Whitty says,
the simple proposition that you should have on the one hand policy
and on the other hand delivery may be too simple; it may be over-simple.
That is not to say it is completely wrong and that it is not solving
some of the things that went wrong before, but there are consequences
for ministers, I think, when you have, as it were, two levels:
you have your department that is advising you and you have beyond
it a powerful agency and you rely on the agency extremely heavily
in these circumstances.
Q782 Chairman: I think Mr Duddridge
has teased out some very helpful observations here, and I come
back to my point: the Department had integrated itself into the
Agency and you said you relied very heavily on the Department
but the very people in the Department who could have given you
another perspective of advice (looking for example, at Mr Lebrecht,
who was the number two or three person in Defra) were involved
in the ERG and they became very heavily involved in the CAPRI
board. Did that intermingling not take away some of your channel
of advice, if you like, from the Department that you have just
said you were very heavily dependent on?
Lord Bach: Arguably it did. I
have already said, I think, this afternoon that there were unofficial
meetings when I would ask very senior officials from the Department
their view or they would give me some advice—and this is
not the formal list of meetings that you have—so it was
not quite as total as you suggest, but on the other hand the Department
is bound, I think, on something like this to want to have a week-by-week,
if not day-by-day, interest in how the implementation about which
ministers have said things is getting along. I imagine that all
the Department was trying to do, they would argue, was to assist
the RPA in reaching the deadlines.
Q783 Chairman: To those of us who
have not only the benefit of hindsight but also of being observers,
looking at all the evidence that we have had from the NAO, from
the minutes and the plethora of data that has been sent to us,
there is a mounting series of problems and if the buck so far
has stopped at the door of Mr Johnston McNeill because he was
removed from his post, and he is the main source of this optimistic
flow of advice which was accepted by the Department, you do have
to ask yourself the question what was informing Mr McNeill and
his management team that it would be all right on the night when
just about every other observer of what was going on was sending
out, and in fact what Lord Whitty adverted to with his contact
in the real world, that the wheels were well and truly falling
off both ends of the axle simultaneously? It is one of those things
where you say, "This is blindingly self-obvious it is not
going to happen", but on went the army, as I said on the
radio on Saturday morning, into the valley of non-payment with
the slings and arrows of people attacking you from the heights,
but on you went, and then, after defending the status quo
with great vigour in front of the Committee, within a month of
that you collapse.
Lord Bach: I wonder if I can make
an attempt first of all at disagreeing with some of other things
you say. You say the buck stopped with Mr Johnston McNeill. Well,
perhaps in a sense it did. I think the buck also stopped with
someone else and it was me, if I may say so, and I think my present
status perhaps is some evidence of that. Although there would
be many who would deny it I think that is the general perception.
Q784 James Duddridge: I must admit
I started off being in agreement that the buck should end with
yourself but, reflecting back to the beginning of the discussions
that as one of your top three priorities everything was going
through the Secretary of State, to what extent was the Secretary
of State responsible?
Lord Bach: I do not think either
the Secretary of State or I would claim our responsibilities were
the same. I actually do not think either of us is to blame for
this having gone wrong, if you press me. I am sure there is more
I could have done, but I was accused by this Committee in their
interim report of complacency and that is an accusation that has
stung, I have to say. I think it is a very easy one to make and
a hard one to refute but I think it is a very serious accusation.
Much more serious than saying a minister is stupid is to say that
he is complacent.
Q785 Chairman: That is very helpful.
So you can get away with stupidity but not with complacency?
Lord Bach: Part of my agreeing
to come before your Committee today, Chairman, if I may say so,
is to try and gently persuade you into thinking that whatever
else I may have been I was not complacent.
Q786 Chairman: You have had your
chance to put that on the record. I think we were stung a little
bit by your observations about our activities on the Farming
Today programme and on the Today programme.
Lord Bach: I think I owe you something
of an apology for that, not a total apology; I must be very careful
not to eat too much humble pie, but I do owe you and the Committee,
I think, something of an apology for perhaps a slight over-reaction.
I think it has cost me though.
Q787 Chairman: And it is accepted
in full measure. What I would say is that the Committee always
considers very carefully what it says, and I have to say for the
record that part of the reason we did put out an interim report,
which is fairly unusual for us to do, is that we were aware of
the growing difficulties that farmers were facing and we wanted
to apply a little gentle pressure to try and encourage the process,
bearing in mind we were not as well armed with knowledge about
what was going on behind the scenes as we are now, and I did a
moment ago preface my remarks by saying that we have the benefit
of this discussion and conversation and the benefit of hindsight,
so I think we are all learning something about this. You mentioned
the question of accountability and where the buck stops. I think
Mark Addison, when he came before the Committee, gave us the first
hint that perhaps what we were seeing was the sum total of the
parts which we managed by retrospective analysis to show where
things went wrong, and you were generous enough to say a second
ago that you felt some of the responsibility lay with you and
some lay with Johnston McNeill.
Lord Bach: I did not say Johnston
McNeill. I actually do not think Johnston McNeill as a personality
is someone who should be crucified. That is not my view. My view
is that the top management of the RPA was not up to task on this
occasion.
Q788 Chairman: The whole—?
Lord Bach: Yes, that is how I
would put it, actually, and were giving advice. You have had this
example. On Thursday 9 March, we were given advice that the bulk
of payments would be made by the first few days of April, not
the end of March but the first few days of April. On the 14th,
five days later, Tuesday, 14 March, and that is a date which I
think will stick in my memory for a while, we were told that there
was no chance at all of such a thing happening, that the bulk
of payments would not be made anywhere near by the end of March
and, of course, as you know, they were not. I frankly have to
say that I do not think that that was satisfactory from senior
civil servants whose job is to tell ministers the truth.
Q789 David Taylor: They were being
complacent on the 9th and stupid on the 14th?
Lord Bach: I do not think they
were deliberately trying to mislead, I really do not think that
at all; there would be no point in doing that, but I think there
was a slight conspiracy of optimism, I have to say, as I think
Lord Whitty has been suggesting existed perhaps before my time,
and it may be that I should have been slightly more aware that
over-optimistic noises were being made. What stopped the bulk
of payments being made, as has been referred to before, was that
at the authorisation stage, the very last stage, all these validations
and entitlements have been gone through and at this very last
stage, to use Helen Ghosh's phrase, something got "gummed
up". That is what happened and I dare say it is not what
the RPA expected to happen but that is what happened, and I have
to say that ministers, of course, were caused a huge degree of
embarrassment, which is not necessarily unusual, by the way in
which the timing worked out.
Q790 Mr Drew: I am confused and I
just cannot get to the bottom of this. I can understand the thing
getting gummed up. What I cannot understand is that from all the
evidence there did not seem to be a full, desktop run-through
of how the thing could function, not would function but could
function, from, let us say, 15 farmers, which we will call X,
through to their mapping exercise, which we will call Y, to their
outcome in terms of payment, Z. Take 15, take 30, take two. Nowhere
in the evidence from all that I have seen did anyone do this desktop
exercise to say, "Blimey! This all works", or, "Actually,
it did not quite work because of problems with Y". That is
where I am flummoxed by the fact that when they pressed the button
and it did not work there was not something to fall back on to
say, "Ah! We had an idea that there might have been some
problem with this when we went live". Is that something you
were surprised about?
Lord Bach: I think, and it may
tell against myself to some extent, you have a real point there
and I have been trying to think since I read some of the evidence
that has been heard before as to why that should be so. Forgive
me quoting, because I do not like to do that; it is almost too
court-like, but Mr Addison, when he gave evidence before you,
dealt with this point and I think he dealt with it as best it
could be dealt with. Sir Peter asked him the question at Q661.
He was asked about testing and he said that "testing could
mean a very wide range of things", and you had had evidence
from others who had experienced that a good deal of testing was
done, that was definitely true. The individual system releases
were extensively tested. If you look at the OGC programme reviews,
all of those reviews looked at the bits of the RITA system that
were being designed, and one of the questions they asked was whether
this had been successfully tested and so on, so there was a great
deal of testing, he said. As it turned out, when the testing did
not happen in the way that it would have been useful if it had,
was the testing of the whole system which would have been a very
major undertaking, he said, would have taken a good deal of time
and would probably have compromised the original target in any
event. There was also lacking, he went on, as he had said before,
a depth of understanding of the way in which the whole system
would fit together and that those were the issues. I think I agree
with what Mr Addison told the Committee on that subject. That
is why I think he said the two causes of what went wrong were,
one, volume, and, two, timetable. It is for that second reason,
the timetable issue, that the testing falls under. I do not know
technically whether it would have been possible to have tested
live to a satisfactory extent, but obviously the decision was
taken not to test live, one, because there would not have been
time, and, two, maybe there were other factors too.
Q791 Chairman: I think the frightening
thing when you look at Appendix 6 of the NAO report, which has
got a detailed analysis of the date when we knew, is that the
number of red marks increases with frequency as time goes on,
and under the column headed "Risk/Issues" it is just
a solid series of red traffic lights. Under "Resources"
we have got red traffic lights from October 2005 through to the
end; "Business Case", red traffic lights all the way
through to the end. There seemed to be a lot of lights shining
that perhaps might have caused somebody to question whether this
was deliverable and for the advice that you were getting to flag
that up.
Lord Bach: Yes, and I think that
is fair comment if I may say so. I notice though, and you will
forgive me mentioning it, that in February 2006, which is Appendix
6, page 44, the last page of the NAO report, that by February
2006 there was a status amber. It goes on to say that since the
last Gateway review, when the probability of making February payments
was assessed at around 50%, a huge effort had gone into achieving
this target, the relationship with Accenture had improved and
they were now performing to a stronger standard. That was encouraging
in the very month that we were going to and did start making payments.
Q792 Chairman: Tell us about fallback
positions because the NAO report talks about the fact that the
technology for a fallback position existed. That was dismissed
on the basis of the optimistic noises but then eventually, when
Mark Addison takes over running the project, within about a couple
of weeks we are into a position of interim payments. Why did fallback
get pushed out of the way so forcibly?
Lord Whitty: If I could answer
for my period and Lord Bach can fill in the rest of the story,
throughout that period there was a fallback of relying on the
existing systems for working out and making a stab at the Land
Register. There was what was called the old systems contingency.
There was a point when the resources devoted to continuing that
contingency would be too much and the probability of achieving
the main aim would have increased to sufficient a level to put
that about, but throughout the early part and a large part of
the subsequent period there was a full-scale contingency arrangement
for paying. The interim issue is a different issue and I do not
know whether you want to deal with that at the same time. The
interim payment issue arose when we slipped the timescale from
December to February, and if you recall December was the earliest
possible time we would legally pay; it was the beginning of the
window. When we slipped to February the issue of an interim payment
was very much pressed on us by the farming industry and was very
much my concern, that if we were not certain of February we ought
to have an interim payment. The pressure from outside, from within
the management system, was the opposite. The OGC report in January
2005 said if you maintain the interim payment option this is going
to divert resources. The Commission said if you are going to pay
an interim payment you have got to get the farmers to securitize
it which really destroys the possibility of it. The view from
the senior management in Defra and the RPA was that we were endangering
not only this year's programme but next year's if we went for
an interim payment. Nevertheless, we kept the possibility of the
interim payment open because by that time it was clear that a
significant number of farmers were going to be in very serious
difficulty if we did not make an interim payment, so we kept that
option open as a contingency.
Lord Bach: It was a live issue,
of course, when I appeared before the Committee last and I said
at the end of that that there will definitely be payment by the
end of February, "whether or not it is a full payment or
the first part of a partial payment" was my direct quote.
The reasons why we did not go for a partial payment then, and
I know the present Permanent Secretary regrets that decision,
and I think she may well be right, was because we managed to start
a full payment, which on the face of it was a better course of
action, but the arguments against a partial payment were reconciliation
with final payments, full payments would not have commenced until
April, risk of false expectations, the whole issue around trading
which could be excluded by partial payments, the greater risk
to 2006, the risk of disallowance still looming in future years
and the threat to the payment window of 2006. They were all powerful
arguments, Chairman, against partial payments where we believed
we could start full payments. After the fiasco that occurred in
March then of course we considered again very quickly whether
partial payments were the best method of trying to at least give
farmers something where they had been expecting something more,
and the Commission agreed and that was what happened. There are
consequences of partial payments that I think will be felt over
the next period of time but the balance had certainly shifted
by that stage. I am sure we were right to agree partial payments
in April.
Q793 Lynne Jones: Could we talk a
little bit about the Change Programme. Although the RPA was not
your direct responsibility, as the Minister responsible for the
CAP reform did you have involvement in the decisions about the
RPA Change Programme?
Lord Whitty: Not in a direct sense.
Clearly I was aware of the programme and the profile that it suggested
but I was not involved in discussing with the RPA in any detail
about the implications of the Change Programme.
Q794 Lynne Jones: So when you were
making decisions about the Single Payment scheme did any consideration
come into play that at the same time as you were bringing about—
Lord Whitty: Yes, to be honest
I was concerned that we would not go too fast on the reduction
of staff which, after all, was a consequence of decisions which
had been taken years beforehand, basically MAFF decisions, that
the rundown in staff was too steep. However, I did think that
the end point was do-able because we were moving from a system
which involved the RPA in processing 11-plus different schemes
to one where they would be processing one, therefore the beginning
and the end points seemed sensible to me in terms of the staffing
levels. I think there were some shifts in the profile of that
which meant that the point where the RPA had just lost such a
significant body of staff was followed by the point where they
should be dealing with the mapping. I was not entirely sure that
the same staff would be the most appropriate to do the mapping
but, nevertheless, that was the point where the staff squeeze
began to be apparent. I do not think that it had affected the
programme at all up until then because relatively senior staff
were developing the programme, it was not a hands-on face to customer
approach, but when the mapping came in, and to some extent the
forms, then clearly we needed more experienced staff, and I think
the impact of the Change Programme on that was probably not sufficiently
taken into account. The overall trajectory of the Change Programme
I never queried. I queried the speed but not the overall direction.
Q795 Lynne Jones: Lord Bach, would
you like to comment?
Lord Bach: I really have not got
very much to say. The Change Programme was in place, it was obviously
quite a dramatic Change Programme over a number of years. The
combination of that with Single Payments plus the Rural Payment
Register difficulties did add up to a little bit too much volume,
I have to say, but by the time I arrived the Change Programme
had been implemented to a considerable extent. I really do not
have any strong views on that.
Q796 Lynne Jones: I know that there
were concerns about the lack of consistency amongst different
offices, as I understand it, but who took the decision to move
to the task-based approach.
Lord Bach: That was before me,
I think.
Lord Whitty: That was before me
as well actually. It is pretty prehistoric. When we wound up the
Intervention Board and other organisations and merged them into
the RPA, the regional offices that had been dealing with everything
were going to be task related. The consequence of that decision
was followed through to the formal Change Programme. It was quite
a 1999-2000 kind of decision which meant that was the future structure
of the RPA. The Change Programme as a term of art was used slightly
later on when it was part of the Defra Change Programme which
meant with the creation of a new department and its agencies there
would be a reduction in staff in total of which the RPA was but
one part. The key decisions of the kind you are talking about
had happened before that.
Q797 Lynne Jones: Yet when the acting
Chief Executive came in, was that Mark Addison, he immediately
did away with the task-based approach.
Lord Whitty: In part, yes.
Q798 David Taylor: The reasons that
government department outsource so often are complex but they
include things of the kind such as "we have not got the resources,
we have not got the skills, we have not got the time to do it
with the people we have directly employed within our department".
We have certainly addressed a lot of the Accenture issues, Chairman,
but I want to make the point I am making now. Sir Brian was moved
to say at one point that it was inconceivable that Defra could
have delivered a programme of this scale without an external partner
such as Accenture. In the cold light of day, months after the
events that we have been analysing both this evening and in the
weeks and months that have gone before with the NAO, do you think
that Sir Brian was right? Was he being a tad over-bullish about
the benefits of outsourcing?
Lord Whitty: I think at the point
when this came in there was no alternative but to have outsourcing
because we had earlier outsourced a significant proportion of
MAFF and Defra IT staff. Whether they would have had the level
of expertise to do it more in-house—you still need some
outside advice—I do not know, but at the point at which
the decisions as to how to deliver the Single Farm Payment were
made there was no way in which we could have managed without an
outside partner.
Lord Bach: I agree with that.
I read what Sir Brian said and thought about it and I agree with
that.
Q799 Mr Drew: Did you ever discuss
staffing in the RPA? We all know about the terrible goings-on
in Newcastle which seemed to be very much a problem with that
office but certainly MPs I have talked to who have RPA offices
in their constituencies, and we got this from PCS, regular briefings
that things were not right within the agency itself, that people
felt very under-valued, they felt completely overwhelmed, and
deliverability was always going to be a problem even if the wonderful
system worked, was that ever reported through to you?
Lord Whitty: I was aware that
following the rationalisation of the RPA from its predecessor
that there was ongoing and understandable resentment. There were
office closures, there were quite substantial redundancies and
re-tasking and that was still running through. I think the RPA
also suffered from the devolution of pay negotiations relative
to the department system, of which I do not approve. I can say
that now I am not a member of the government. It did lead to severe
differentiation between RPA staff's pay and sometimes the staff
who were in the office next door or even the same office. I think
there was a morale problem. My personal judgment is that was not
the reason we did not deliver the system.
Lord Bach: I read the PCS's evidence
very carefully and one of my regrets here is that I did not see
them when I paid my visits. When I was at the Defence Ministry
when I paid visits I would always see the unions involved. I did
not when I had my two visits to Reading and one to Carlisle and
I now wish I had.[1]
I have to say that I did hear that there were some staff difficulties,
indeed RPA senior officials did not shy away from the fact that
there were some concerns and, indeed, I believe there was some
prospect of industrial action of some kind towards the latter
part of last year in which I took a very special interest.
1 Note by witness: I made three visits not
two. Back
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