Examination of Witnesses (Questions 840-859)
MR TONY
COOPER, MR
SIMON VRY
AND MR
IAN HEWETT
27 NOVEMBER 2006
Q840 Mr Drew: That was not the case
in the previous incarnation. I do not go along with the horror
stories which were identified in the press, I think that was the
extreme end of what was going wrong, but it is symptomatic of
an organisation which was employing the wrong people. Any organisation
which has got this level of complexity, and even though you can
make the particular functions that people are working on rather
mechanistic, it is all about knowledge and application and, I
have to say, a degree of interpretation. You are not going to
get that with temporary workers?
Mr Cooper: There are a number
of reasons for some of the difficulties you are describing. One
is the experience of some of the management, which is being addressed.
Another is the nature in which the training was delivered and
the speed with which the training was delivered. Whether, as a
management team, we provided the right tools for these people
to do the job properly, I do not think it would be fair to think
that they were armed, fully equipped to be able to do the job,
so I think I want to defend a significant proportion of the staff.
There will be one or two who will have left who were ineffective.
Q841 Mr Drew: Give us an idea of
how many? If you are hiring students, which was the way and it
seems to be the way you are continuing to work, with the best
will in the world those students are going to work for, if it
is the summer holidays, we are talking about three months. If
you have got them on a part-time basis, there is a limit to how
many hours they can serve you for and, more particularly, they
are going to come in and out of work because of the nature of
their studies, and so on. Give me a feel for what sort of number
of people were involved in that category?
Mr Cooper: In overall terms then,
in fairly sort of round numbers, there are round about 2,300 permanent
members of staff in the Rural Payments Agency, and today, because
it does move around, there are round about 1,400 Agency staff,
and the balance is made up with fixed-term appointments and casual
staff who are employed directly.
Q842 Mr Drew: How many casual staff?
Mr Cooper: I need to ask my colleague,
Mr Hewett: do you know the number?
Mr Hewett: The numbers are bouncing
around all the time, but casual staff tend to be dominated in
one or two offices which have gone through the fair and open competition
route to get those casuals out for a period of up to two years.
Q843 Mr Drew: That is not students?
Mr Hewett: No, absolutely not.
What I am saying is that there is a mix of staff, and that is
for a very good reason. During the course of 2005, processing
SPS, we encountered a number of issues, one of which was to make
better use of the IT system for longer during the day, so we were
running dawn shifts, six till nine, twilight shifts, six pm to
nine pm, and sometimes double day shifts, and it is trying to
get people around those certain times, to try to flex the IT system
as much as possible. People who were available for short periods
of a working day, if you like, outside of the normal nine to five
period, would be quite helpful to us. What we are trying to do
is move to a more permanent situation and the numbers which Mr
Cooper mentioned, in terms of employment agency, we are in the
process of trying to convert some of those, I will not say all
of those but some of those, to fixed-term status, working with
the new HR Director that Mr Cooper has brought in. I was speaking
to him only this morning on that subject. The new HR Director
and I are going to Newcastle, I think on Thursday of this week,
for the first of specific sessions on training, where we are bringing
together people from each of the sites who have experience of
processing SPS to see what changes we can introduce quickly into
the training process to build on that which is already there.
Chairman: For the avoidance of doubt,
Mr Hewett, and again to make certain that we get an accurate view,
in commenting on what the problems are that you are addressing
presently, there is a sort of retrospective feel about this. If
I turn it round the other way, in terms of what we have just heard,
this says the right management were not appointed, the right training
packages were not originally put in place and nobody really understood
how the IT system was fully to operate, given the volume of tasks
that you had to do.
Mr Drew: And the wrong staff.
Q844 Chairman: Indeed, and you have
just talked about having to flex the IT system and bring in a
pretty heavy series of shift-working solutions to cope with what
you had to cope with. Is my surmise correct?
Mr Hewett: No. I would say not,
Chairman. The first point is that 2005 was the first year that
we went through the Single Payment Scheme and certainly we found
issues as we went along. I think it has been well documented,
the level of change, the amount of land that we had to register,
the time it took to register, etc. All of that meant that
we have tried to learn the lessons from 2005 and are moving things
forward, both in terms of the type of staff that we have running
schemes and the amount of training.
Q845 Chairman: Mr Hewett, You are
quite right in saying you are trying to learn the lessons, but
part of our task is to get a very clear and accurate sight as
to what actually went wrong. We are getting some good answers
about what is happening into the future but I come back to the
fact that we were just told that the training was not right and
the management was not right. Those are facts; those appear to
be incorruptible facts. You are not disputing those, are you?
Mr Hewett: Yes, I am, because
the training was provided at the time based on what we knew about
the system and about the processes.
Q846 Chairman: Let us go back to
one stage before then: you did not know enough about what it was
you were supposed to be doing?
Mr Hewett: I think it is well
documented, Mr Chairman, that we did not undertake full end-to-end
testing for the whole process, the end-to-end process; we did
incremental testing of the various components as they came along.
Knowing what we know now, if we had undertaken that full end-to-end
testing, we may have come up with a different solution in some
of the processes.
Q847 Chairman: This relates back
to the line of inquiry I was putting with Mr Vry, that people
set off in the direction of travel not quite knowing what the
road map was. Seemingly, you have got some idea of where you would
like to end up, but you did not know quite how you were ever going
to get there?
Mr Hewett: When we set off, of
course, we were not going to administer the Single Payment Scheme,
we were going to administer 11 farm-based subsidy schemes which
we had had since 1993.
Chairman: Mr Hewett, you knew that the
negotiations on the Single Farm Payment were proceeding and your
Agency had close touch with ministers over that. We did a report,
if we go back to 2003, in which we flagged up some of the problems
that you were going to face, whatever the situation, so I think
everybody knew in which direction of travel you were going. The
point I am getting at is trying to understand what went wrong
in the ingredients of the team who were planning and who had to
execute the new direction. The main message I am getting, whether
we like it or not, from the words you have said, is that the management
were not up to it and the training was not right, in the light
of what you encountered.
Q848 Lynne Jones: Perhaps Mr Hewett
could add something. I just wanted to chip in with a comment.
You have no comments to make on policy?
Mr Hewett: I am sorry. I have
been through that before, on policies. We discovered issues as
we went along and we tried to deal with them as best we could
at the time. With the benefit of hindsight, clearly there are
things which we are trying to do now which, if we had done them
before—
Q849 Chairman: That accounted for
the mounting level of risk which Mr Vry outlined, did it? In other
words, you went along discovering things; you discovered it was
a far more complicated, risky and difficult venture than you had
planned for?
Mr Hewett: I think that is fair
to say, that the level of complexity became clear only very late
in the day.
Q850 Lynne Jones: How late in the
day, would you say, because the Minister wrote to the Committee
in January saying, you mentioned just a little while ago that
the original system was set up to deal with the original CAP tasks
and then you had the reform, but he told the Committee that the
impact of reform would not be significant on the overall IT solution,
and that was in January, in a letter to the Committee? How could
the Minister have had that impression in January?
Mr Hewett: Some of the issues
became apparent only after that point, some of them were identified
before, but some of the complexities and the level of manual tasks
which were required to be processed became evident only after
that. I have looked back at the information that we have been
producing on a weekly basis over many months leading up to the
first payments going out in February and the number of tasks requiring
manual resolution increased substantially as we went along.
Q851 Lynne Jones: I have looked at
some of those and you have Johnston McNeill's memorandum saying
basically "This week we've identified X thousand more tasks,"
and that had been happening on a weekly basis and yet no alarm
bells seem to have rung, such that the Minister was still giving
out assurances that payments were going to be started at the end
of February?
Mr Hewett: They started on 20
February.
Q852 Chairman: Just to back up that
point which Ms Jones has made, I looked at one of those reports
and by the time the decision was being taken, that you were going
to recommend to the Minister you would start paying out by the
end of February, the task rate had gone up from, I think, a sort
of September figure of 440,000-odd to over 700,000. What amazed
me was that no bells seemed to ring that you might not make it?
Mr Hewett: The information that
I think went forward explained that we would not complete all
of those tasks by the middle of February but that we were satisfied
with the degree of accuracy on the overall level of entitlements
and payments, meaning that we could start in February, as we had
announced some 13 months earlier, and we did make a start to payments.
Unfortunately, the payments did not flood out as we were hoping,
they trickled, and it was at that point we became alarmed.
Q853 Chairman: Just to be absolutely
clear, there was not a point, Mr Hewett, during the year 2005,
at which anybody in the Agency, from Mr McNeill downwards, involved
in the senior management, ever had a scintilla of doubt
that you were actually going to be able to do what you said you
were going to do by the end of February 2006?
Mr Hewett: I think Mr Vry has
already explained that the level of risk, the risk profile, changed
and the risks increased.
Q854 Chairman: That is the point
I am getting at. The risk profile changed, going through 2005.
As you say, this was a voyage of discovery, you were finding out
the complexity, you were finding that more things were going to
have to be done than you bargained for; behind that there was
an argument, a discussion, interim payments, Farmers' Union requesting
to know whether you were going to do it. That started towards
the back end, the autumn, of 2005, and, in spite of that, you
believed that you were going to make it to February 2006 and it
would all be okay. What I am trying to get at is that you never
wavered from your belief that you could actually deliver 100%
of what was required by the end of February, in spite of the fact
that every observer from outside was seeing mounting problems.
Huge problems with the mapping, lots of unanswered letters, poor
communications, all the things that you know about, but which
never made you sway one moment from saying, "Excuse me, do
you think we ought to think about interim payments?" before
you came to the conclusion in 2006 that you needed to do interim
payments?
Mr Hewett: I think very much we
did consider interim or partial payments, even before the European
Union adopted a regulation to provide for that, and we discussed
with our policy colleagues the potential for that and, once a
regulation was adopted and the conditions were prescribed, whether
that was something which would assist, or not, as the case may
be. The general conclusion was that it would not help and it would
add even more work, if we were to try to undertake complex processing
of a partial payment to meet the regulatory requirements, and
so at that time it was decided to continue with the strategy of
going for full payments. It became apparent only during the months
of March and April, when we did not achieve the level of full
payments that we were anticipating, that we needed to move into
a partial payment scenario. It was at that point that Mr Addison,
on advice from colleagues within RPA and discussion with policy
colleagues, sought agreement to make a partial payment, and that
is what we did.
Q855 Sir Peter Soulsby: Chairman,
I think what we all struggle with is to try to understand how
the problems and the risks which were being talked about within
the Agency and within the Department led to such a catastrophic
failure. A catastrophic failure which, from what you have described
today, still presents you with a backlog which is quite enormous
and quite astonishing, really, in terms of just the correspondence,
never mind some of the other aspects of it, with what you appear
to have described to us today being an organisation which really
seems to have no aspect of its business that is yet anywhere near
stable and, as I understand it, a recovery plan which is two years
from completion. First of all, is that a fair summary of the situation,
that there is not anything which is stable, there is an enormous
backlog and it will be at least two years before this recovery
plan is fully implemented?
Mr Cooper: There is certainly
a tail of work, or a legacy, from the 2005 experience, which is
still with us. Ideally, we would have been able to focus more
effort on the 2006 scheme without having to clear up the 2005,
but, inevitably, you have got to do that before you can move on
to the 2006. Yes, there is work to be done on 2005; 2006 though,
I do need to emphasise that we did not just stand by and watch
2005 only. The 300 people that we recruited have gone through
the first, what we call, Level 1 validation, the initial check
of all the claims that have been made, and clarified a number
of points which needed to be clarified. There is progress being
made there, and now we are processing 2006 claims.
Q856 Sir Peter Soulsby: Perhaps you
could tell us just where you are at with the Level 1 and Level
2 validations?
Mr Cooper: Level 1, I think there
are about 1,000 of the Level 1s which have not yet been completed,
and that is either because we are still waiting for some information
or there is some oddity in the IT, which has been identified,
which is preventing that case from just moving to the next stage.
That has not stopped us though from moving those cases which have
cleared the Level 1 into Level 2 processing, so the Level 2 processing
is now underway. For example, we have identified the claims which
have potentially dual claims on them, so that we can resolve those.
We are continuing to progress through the Level 2 validation.
In terms of your question about where are we going to be with
2006 then I think the Secretary of State has made it clear already
that 96% of the fund value by the end of June is going to be challenging,
and that is certainly my opinion. What we are trying to do obviously
is seek further improvements for the 2007 scheme and it is probably
worth bearing in mind that the 2007 scheme actually kicks off
when the forms are pre-populated on issue to farmers in March,
which is only four months off. Of course, that relies on us having
good information to put on those forms.
Q857 Chairman: On a technical note,
your term `pre-populated'; that means that the information about
the mapping, etc., the information that farmers have given for
the 2006 payment, is put onto the form for 2007, and in March
next year farmers will look at that and will have to decide if
it is accurate or whether there have been any changes?
Mr Cooper: That is right; and
they have to return that. The further forward we are on validation
means that the quality of the information that we can provide
is going to be that much better to the farmer, and therefore the
farmer has to change less, and once we go through that cycle,
the 2008 one, that is when we expect to be in a better position.
In my view, it should be a 12-month cycle, let us say, for a scheme;
at the moment it is not, it is running at 18 months and beyond,
and so my task is to shrink that into a 12-month period so that
the information going onto the start of the process for the pre-populated
claim forms is accurate. When I get to that position and the faster
processing then that is when we are in a stable and, what I would
call, a predictable state.
Q858 Sir Peter Soulsby: Mr Cooper,
you have mentioned the Secretary of State's target for June 2007
and you have also mentioned your task. What are the consequences
for you and your colleagues if you do not meet this target, and
indeed, while we are about it, for how long are you with the Agency?
Mr Cooper: For how long am I with
the Agency: my contract is until the spring of 2008.
Q859 Chairman: Are you on any kind
of performance bonus?
Mr Cooper: I am, yes.
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