Examination of Witness (Questions 1140-1159)
MR JOHNSTON
MCNEILL
15 JANUARY 2007
Q1140 Mr Williams: Yes.
Mr McNeill: No. There was a note
which went to Lord Whitty from Brian Bender following discussions
at ERG[2]—I
actually came across it recently—and it was put to him that
we could not possibly take on SPS and continue with the e-enablement
programme, with the SPS being internet accessed, et cetera;
it was just a bridge too far, and e-enablement was de-scoped.
I seem to recollect that Lord Whitty was concerned about that
because, of course, he had been involved, as I recollect, with
this concept that this Change Programme was about savings[3]
through e-enablement.
Q1141 Mr Williams: Lord Whitty says that
in retrospect he thinks it is probably true that it was not sensible
to have reduced the staff by that much. The decision had been
made by senior management in the RPA and with Defra at a much
earlier stage. As I understand it, even though the e-enablement
scheme was jettisoned, the staff continued to be removed from
the RPA.
Mr McNeill: Yes. There are a number
of points worth noting. One is that we had to take decisions.
We have obviously got a business plan, which was agreed with the
board[4]
and indeed with Cabinet Office and Treasury in terms of it being
funded. Ministers had to take decisions as to which RPA offices
were to close. A number of options were put to them and they decided
on which RPA offices should remain and which offices should close.
In some cases we had little choice. Cambridge had to close because
it was demolished. It was a PPP/PFI buyout where a new office
block was built and there was no longer accommodation for the
RPA staff in any event, so it was Hobson's choice for us; that
office had to go. There were other offices, such as Crewe. The
Regional Development Service had been set up at this stage and
RDS wished to take on the experienced staff that we had at Crewe,
which, after all, from a trade union perspective, our perspective
and indeed a public purse perspective made eminent sense rather
than making them redundant. There were job opportunities here
and so those staff were transferred to RDS and Crewe disappeared.
We did shut other offices because we also had to make decisions
fairly early on in this process and that was where the investment
in infrastructure was to be made because we had to put in new
pipes, new computers, we had new Sun systems delivered into Reading,
and we had to decide where that very substantial cost was going
to be made, and so for a relatively small number of RPA staff
in Nottingham it was clear that that decision for the short term
was perhaps not such a wise one. The other fact is that we had,
in consultation with the unions, made it clear that staff were
going to be potentially redundant, and indeed had indicated which
offices were going to be closed, and obviously staff started to
make plans. I can only assure you that Hugh MacKinnon and my Director
of Human Resources went to Nottingham and we actually asked him
to stay for a short time longer, some months, and, in the words
of Hugh MacKinnon, whom I spoke to recently, he felt he was lucky
to get away without being lynched as a number of staff there had
made their plans and had decided to move on, quite rightly. It
was not as if staff were desperate to stay on. Having had the
situation put to them and having decided to take an early retirement
package they wanted to leave. The other important fact in this
is that in the meanwhile we had taken on the British Cattle Movement
Service. We had 450-plus staff based there. We had a call centre,
we had experienced staff that we could divert to this work. We
had them hooked into our infrastructure because they were going
to be part of the RPA. We asked to take over the British Cattle
Movement Service, Chairman, because we had gone through, and I
think Brian Bender touched on it but he may not recollect all
the detail, serious reputational damage at the RPA because of
the very high—and I am talking hundreds of thousands of
anomalies that existed on the British Cattle Movement Service
database. Before April 2003, I think it was, the British Cattle
Movement Service was the responsibility of a Grade 3 within the
Defra core department. We were very concerned that every time
we went to cross-check bovine claims against that particular database
we were running into serious problems where we could not make
payments because the BCMS database reported animals were not there
or did not know where they were. It is a well documented piece
of work. We therefore took the view that rather than spend large
sums of money piping up offices where we had staff that quite
rightly had made plans to move on, we would be much better making
that investment into the British Cattle Movement Service and we
would be much better preparing those staff to work with us. As
a consequence we now have a virtual call centre where we can seat
350 staff on telephones to deal with any crisis that might arise,
avian `flu or whatever. We have staff there that are multi-skilled
who can assist us in CAP scheme management. The big skill they
have, of course, is that they are well used to talking to farmers,
and if I am perfectly frank, Chairman, that is about the best
skill that the staff in the offices we closed had. They were used
to a claims-based way of working which was completely different
from the task-based way of working that we had put in for SPS.
They certainly had a skill in dealing with customers and that
was I think the biggest attribute they could have brought to us.
The RPA/BCMS I think has proved to be an exceptionally good merger.
The other thing about the SPS scheme is that we have moved from
a raft of CAP schemes, I think it was nine agricultural schemes,
spread out throughout the year which kept staff busy all of the
year, into one annual scheme. This creates a massive cyclic issue
in terms of staff planning and that was the other reason we wanted
to make the investment in BCMS, because BCMS can back off from
their own core work to assist us during peak times and then move
back into it, and from a longer term savings/efficiency point
of view it made sense to do that.
Q1142 Mr Williams: But having decided
to go from an electronic scheme, although not implement an electronic
scheme, to a task-based scheme, what assessment did you or the
RPA make of the capacity of the staff that you had there to complete
the task?
Mr McNeill: The decision to go
task-based was made in 1999 following the PwC report. It was made
two years before I came on the scene. It was never up for further
decision; that decision had been taken. No-one ever said it was
not possible. It was something that I never even raised because
I was handed a case saying, "This is what has to be put in.
Do it", so in terms of the work I never actually got to see
what assessment had been done about the ability of staff to transfer
from a claims-based to a task-based system of working. I have
to say, as you, Chairman, and others round the table have noted,
our RPA staff are totally dedicated. RPA staff were working double
shifts on this piece of work night and day, at weekends, and I
can only give them full credit for their commitment. I do not
think they would have had any problem in taking up a task-based
scheme. My point is that for those offices that we said would
close they had certain skills but they did not have the experience
of task-based working. They would have had to retrain. Interestingly,
when we went to see the Passport Office as a lessons learned experience
the RPA team was told that where staff had stayed working and
had worked previously with the old paper-based approach to issuing
passports many had found it extremely difficult to work simply
on the screen and deal with things on that basis, whereas new
people coming in did not have constantly to think about the old
paper based system or were not constantly deflected by the old
system of working, and that was, I think, a fair comment.
Q1143 Mr Williams: So you are implementing
a task-based scheme but it must have been clear to you that good
customer relationships with the farmers was essential if the new
scheme was going to proceed, and yet you seemingly lost the staff
that could address both those issues.
Mr McNeill: Yes. On reflection
I ask myself why that did not cross my mind. I had had little
experience of working with CAP scheme management prior to taking
up the post, but I remember that we spent a lot of time going
round the RPA offices talking to staff. I remember sitting listening
to one of the RPA operatives at a very early stage talking to
a farmer, and, to be perfectly frank, it was an excellent service.
It is the old bank manager in your local bank type of relationship
able to sit down and almost on a one-to-one name basis, and I
do not mean that inappropriately, and it really was an excellent
service. However, as I say, our decision had been made.[5]
It did cross my mind, "This is going to be a hell of a cultural
shock to customers to move to this new way of working", but
then, of course, we were not looking at that relationship continuing
with people on a task base. We were looking at internet access.
We had the statistics which showed that a very large percentage
of farmers, particularly after foot and mouth disease, had internet
access. They had used it effectively during the FMD crisis to
communicate and lots of them had computers and internet access
because they have got children and families use them, and we had
all those statistics. What we were aiming for in this e-enablement
programme was that they would not be phoning us as such; they
would be going on the internet and the system would tell them
where things were wrong in their CAP applications.
Q1144 Chairman: Who was the author of
the Change Programme?
Mr McNeill: As I recollect, the
initial authors of the Change Programme were PricewaterhouseCoopers.
Q1145 Chairman: So they would have
been the ones to have made the recommendation to the Permanent
Secretary?
Mr McNeill: I was not about at
that time, Chairman, but there was a board set up; I think it
was the R2K Restructuring Board. I think Jane Brown, in her role
as the Head of MAFF Regional Service Centres, chaired that, and
indeed it was Jane I spoke to at the time of the advertisement
for the job, and she had indicated that she was interested. I
think at that time she was chairing that board, yes, and then
a paper would have gone from the board, I would imagine, to the
Permanent Secretary and senior Defra colleagues and then to ministers.
Q1146 Lynne Jones: Can I just come
in on this business? I can understand what you are saying about
farmers having been used to this cosy one-to-one relationship,
but there would not have been a problem had there not been so
many problems. We have had evidence from the Central Association
of Agricultural Valuers and farmers about their frustrations at
not being able to get answers about the whole mapping exercise.
They would go through several bits of correspondence, maps being
faxed out, they would get it nearly all right and then all of
a sudden it would all unravel again.
Mr McNeill: Yes.
Q1147 Lynne Jones: The farmers were
basically tearing their hair out about this. Surely you must have
been aware that this was going on and that there was nobody who
knew what was going on with any individual claim. We are talking
about, going back, a process between 2003-04 up to the point when
you decided to outsource that particular exercise. Did you not
think, "Is there something wrong with this system in that
we have not got anybody who really knows what is going on and
is this task-based approach the right approach? Did you ever query
who had made the decision and whether it was the right decision?
Mr McNeill: A part of the vision
was that we would deal with customers through a customer service
centre.
Q1148 Lynne Jones: But nobody knew
the answers, nobody knew what was going on to be able to deal
with the customers.
Mr McNeill: I accept that. We
launched the customer service centre on 14 February[6],
and I was there and I spent pretty much three or four days a week
there for the next five or six weeks, when we realised we were
running into serious problems. The difficulty was that the customer
service centre was based in Newcastle and I have to say that there
was a resistance on the part of some staff in Newcastle, in fact
a number of staff in Newcastle, to take up the posts in the customer
service centre which we had not anticipated.
Q1149 Lynne Jones: It is not surprising
if you have to deal with a load of justifiably angry farmers.
Mr McNeill: I accept that point,
but part of it was a cultural thing. There were a number of customer
service centres in Newcastle and they were not seen as particularly
high quality jobs, and of course there has been a trend over some
time now where customer service centres are outsourced to India
or wherever, and I think there was concern on the part of RPA
staff that this was going to be a retrograde step in terms of
their future, so we had some difficulty getting staff in Newcastle
where the customer service centre was based as part of our organisational
design. That was problem number one, so we had to man the customer
service centre with a number of temporary staff under the supervision
of those RPA staff that we could get to supervise it. In addition
we brought expertise in from the British Cattle Movement Service
in Workington, which is not that far away from Newcastle, and
we had them work with the customer service centre. The other thing
was that the initial vision was for, I think, a 100-seat RPA customer
service centre that went nowhere near what we required to meet
our customer base.
Q1150 Lynne Jones: I think we understand
what the original vision was, and you said somebody had made the
decision to go down this route and therefore you inherited it,
but it was quite clear it was not working. It was a bizarre situation
where you had nearly 4,000 staff to pay out 120,000 claims, which
was only about 20-30 claims per member of staff which could have
allowed a cosy one-to-one relationship. Did you not at some point
say to yourself that there was something going wrong with the
system and was that decision to go down the task-based route the
right one? Did you feel that you had not got the power to change
anything?
Mr McNeill: The 4,000 staff are
not just working on SPS claims, they are paying out other CAP
and trader claims. There are trader schemes, et cetera,
in Newcastle, 300 or 400 staff there. There is the BCMS, 400 or
500 staff there. There is an inspectorate of 450 staff, et
cetera. They are not involved in claims and processing. I
think it has been identified by everyone that the whole CAP procedures
are complex and time-consuming if you are to avoid disallowance
and SPS, which was supposed to be a simplification, has proved
to be—I think it has been quoted by a number of people—one
of the most complex CAP schemes that we have ever had to deal
with.
Q1151 Lynne Jones: Did you ever query
your inherited system?
Mr McNeill: Not the Customer Service
Centre. What we did do was enable it to be expanded quickly using
the facilities at the British Cattle Movement Services Centre.
Q1152 Lynne Jones: Not so much the
Customer Service Centre but the inability of those operatives
to actually have access to the information that their customers
needed.
Mr McNeill: Yes. The difficulty
with the Customer Service Centre was people were working off a
question and answer brief on the screens in front of them, a customer
asked a question and RPA staff tried to find a match on the screen,
they were not scheme experts. Indeed, how could they be scheme
experts or, indeed, how could that Q&A be comprehensive when
this was a brand new CAP scheme. Policy detail on SPS was not
clear until the end of 2004 quoted by Accenture as a matter of
fact, a matter of record, if you look at ministerial announcements.
The fact of the matter is it was very difficult to get a SPS Q&A
brief because it was the first year of the SPS scheme and there
were new customers we had never dealt with before, some 40,000
of them, and existing customers who were very keen to talk to
us about new land and other issues and, indeed, about the SPS
scheme. We developed a Q&A working with Defra policy colleagues
but the trouble was that farming is a complex business, every
farmer has perhaps a different mix, different questions, novel
issues that they want to raise and then we had to escalate those
to Defra policy advisers and, indeed, in some cases to Defra lawyers
for advice. It really was quite difficult. Particularly in the
first year of SPS we knew it was going to be very, very painful
and, indeed, we were very worried about out customers. We had
statistics about the numbers of Customer Service Centre calls
we were receiving, the numbers of people who were hanging up,
and we were monitoring that certainly on a daily basis. Eventually
we had to go to the Department and ask for—I think Brian
Bender mentioned it in his evidence—additional funding to
put on some external call centres from BT and others to cope with
what we could see was going to be a massive spike of SPS work
that had to be dealt with.
Q1153 Lynne Jones: You did not think,
"There is something wrong with the system we are operating,
it is too chaotic to carry on like this"?
Mr McNeill: Unfortunately, at
that stage it was probably too late. What was the option? We could
not go back to a claims-based approach for SPS, we had no way
of doing that.
Q1154 Lynne Jones: It was what Mark
Addison did in the end.
Mr McNeill: I do not think so.
We in the RPA had concluded early on that the task-based approach
was not satisfactory. Accenture had already briefed that for the
2006 scheme that in actual fact we wanted to move back to a better
understanding of the relationship between SPS tasks and SPS claims.
The work that we had initiated on batch authorisations, and I
think it is fair comment, came to fruition[7]
and the RPA were able to release those 44,000 SPS claims and payments
because the RPA were able, with Defra legal agreement, to remove
those barriers and those six checks became two. Once they went
down to two batch authorisation checks that money went out to
RPA customers.
Q1155 Lynne Jones: So you were already
pressing for those changes, are you saying?
Mr McNeill: Certainly in terms
of the legal discussion. Gill Robinson, who is the head of audit,
led the Assurance Working Group that was working with Defra legal
to get this cleared.
Q1156 Lynne Jones: Sorry, what legal
discussions?
Mr McNeill: The legal advice to
the RPA is provided by Defra, the RPA do not have their own lawyers,
so if the Defra lawyers said to us, as was the case, "You
do this and you will suffer disallowance", the RPA obviously
cannot do it.
Q1157 Lynne Jones: So you were just
so focused on the idea of the disallowance that you were not getting
on with the customer service?
Mr McNeill: No, on the contrary.
As I have said, Gill Robinson, working with the statisticians
I mentioned earlier, working with her auditors, was looking at
the reasons these claims were failing batch authorisation with
a view to getting those checks removed proving that in actual
fact it was belt and braces to the satisfaction of Defra lawyers.
Q1158 Chairman: Let me ask this question.
You have put a lot of emphasis on the newness of this scheme.
If we go back to the introduction of IACS, that was as novel a
scheme in its own way as this one was but I do not recall there
being anything like the kind of problems that there were with
this. There were some difficulties with the mapping but they were
quite quickly resolved. In the days of IACS there were many more
schemes than by definition when we went to SPS. I think that is
the bit where if you are looking for a benchmark to say "We
are running into problems", you would look back at the previous
very complicated scheme on paper and say, "How come that
went as smoothly as it did whereas we are into a mounting tide
of difficulties on this new one?" You would have expected
somebody at some point to have said, "This does not feel
right".
Mr McNeill: Chairman, Bill Duncan,
who unfortunately retired and has left the RPA, was a lead player
at the time of the introduction of the IACS schemes. In fact,
I think he was awarded his OBE for his tremendous efforts in that
area. Bill was the lead player who the RPA fielded in the discussions
with our Defra policy colleagues, and you will have seen some
of the quotes attributed to Bill about this particular scheme.
I have spoken to Bill at length, he is now retired and living
in Scotland, and he assures me that he felt what we ended up with
was much more complex than IACS. I remember a discussion even
before his retirement, "Had IACS been as bad?" and I
am afraid it is a bit like the good old days, there were many
problems with IACS, Chairman, and many issues which took them
some two or three claim cycles to resolve.
Q1159 Chairman: But if it was more
complex, and that is quite an interesting observation, and you
had got somebody like Bill Duncan who had a lot of experience
of the previous system—It is probably Mr Duncan ringing
you with some further information.
Mr McNeill: Sorry, Chairman.
2 Executive Review Group. Back
3
Note by witness: "in delivering CAP scheme payments". Back
4
Note by witness: "CAPRI and ERG". Back
5
Note by witness: "before I joined the RPA". Back
6
Note by witness: 2005. Back
7
Note by witness: "shortly after my departure". Back
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