Examination of Witness (Questions 1160-1179)
MR JOHNSTON
MCNEILL
15 JANUARY 2007
Q1160 Chairman: You would have expected
somebody in the senior echelons of Defra to have said, "Um,
maybe we are trying to do too much in too short a timescale".
Mr McNeill: The particular issue
I wanted to discuss with Bill and it was Bill Duncan and Hugh
Mackinnon who had the best CAP expertise that we had to offer.
Hugh Mackinnon was the RPA Director of Operations and had been
involved in CAP scheme management for some 30 years; Bill Duncan
likewise. They were the two people that we favoured to discuss
what could and what could not be done. What has been said is true,
Chairman, they never said, "This can't be done", but
I have spoken to both of them at length and they are both clear
they repeatedly said, "The more complex you make this, the
more high risk this is going to be".
Q1161 Chairman: But when this programme
was initiated and the design was evolving, the complexity was
becoming clearer, who at the top of the office was saying, "Don't
worry, this is the chosen course, it will be all right"?
Mr McNeill: Chairman, David Hunter
is quoted as saying that "the RPA will do what the RPA is
told to do", and I have to say I do believe there was a significant
element of that. We were an Executive Agency and we were there
to do what the Department (Defra) wanted and if they wanted that
delivered we had to deliver it. I have spoken to Bill about it
and he is quite clear that he certainly was very keen, as indeed
were the NFU and others, that we should keep this as simple as
possible from an implementation point of view.
Q1162 Chairman: In spite of this
mounting tide of complexity there was never a time when you were
responsible as the Accounting Officer that you had a scintilla
of doubt, or even a serious doubt, that you felt you should have
got hold of the Permanent Secretary or even ministers and said,
"I'm going to try and do it but you have got to realise that
this may not be do-able within the timescale that you guys are
indicating that you want the Change Programme implemented and
SPS introduced and other things as well"?
Mr McNeill: The RPA change programme
since 2001 before SPS/CAP reform started was high risk. I think
it has been generally acknowledged from a number of people who
have given evidence here that SPS added yet more to that risk.
We have OGC reports at the back of the NAO report.
Q1163 Chairman: Indeed.
Mr McNeill: We have OGC and RPA
reports which have red all over them. We were reporting at the
time of the SPS policy discussions, "This is increasing the
risk.". Did we ever say no?
Q1164 Chairman: Why I am—
Mr McNeill: I understand the question.
Q1165 Chairman: Why I am asking this
question is because, and we will probably come back to it at the
end but let us face up to this, this is about accountability.
Here we have got mounting complexity and problems, there are a
lot of red marks, you are absolutely right, and yet onward sailed
the ship heading towards the iceberg. What I want to know is who
was on the bridge? Who was saying, "Keep going"? We
are going to talk in a minute about the choice of payment model.
There must have been a point certainly in 2004 when there was
some flexibility about changing course or delaying the process
of actual payment to give you a bit more time to try and evolve,
explore, understand and ultimately deliver this high risk programme.
The message I am getting is that from the top of the office, the
top of Defra, the message to the RPA was clear: "You will
deliver within this timescale". Who at the top was telling
the boat to sail on?
Mr McNeill: Chairman, when the
Commission were notified in July 2004, possibly August 2004, that
we were going for SPS in 2005 that was that fixed and there was
no turning back. That is my best understanding of the situation.
I think it was the case that we made it clear to the Department
that this was do-able, extremely high risk but do-able, but also
at the time we were saying that in 2003 we did not have the full
details of what this scheme actually looked like. It took until
the end of 2004 until the SPS policy was clear and, as Accenture
noted, the devil was in the detail. What we said was, "If
you can tell us by the end of 2003 what this is and we can get
Accenture started to build this without coming back and changing"—I
think Accenture quoted 60 change requests that came through, largely
policy driven, 21 significant policy changes. At the time we asked
the question, "When will the SPS policy be clear?" we
were advised it would probably be clear and we would be able to
push on by the end of 2003 but it was 12 months later. That was
what increased the risk dramatically.
Q1166 Chairman: When you talk about
"risk", because the Office of Government Commerce attempt
to quantify risk, what is your quantification of the risks at
the beginning and then subsequently as difficulty mounted? Have
you got your own McNeill risk score?
Mr McNeill: The difficulty was
that one date was the target. As Mark Addison noted, once ministers
had announced the target of starting payments in February, the
bulk of payments had to be out by March 2006.
Q1167 Lynne Jones: That was from
your advice though. That was what you told ministers.
Mr McNeill: On the contrary, that
target was set for the Agency. We were keen to go for the EU requirement
which was that payments be made by the end of June 2006, but obviously
that was unacceptable because we had been setting new track records
on payments for the previous CAP scheme for some time.
Q1168 Lynne Jones: If they were to
be completed by the end of June they would have had to have started
somewhere.
Mr McNeill: The CAP/SPS payments
window opens at the start of December and you can legally pay
out on CAP payments until the end of June.
Q1169 Chairman: Let us wind the clock
back a bit because what you have just said is quite significant.
You said that as the Chief Executive of the Agency you would have
preferred to have gone for a payment window at the maximum point,
that was June 2006. Did you at any one time communicate in writing
to the Permanent Secretary, the Secretary of State or a minister,
something that said, "I would prefer to do that"?
Mr McNeill: The setting of targets
was an issue an issue that arose between the Agency and Mark Addison's
Ownership Board unit. He headed up the Operations/Ownership Board
unit function and when we were setting those targets, and I remember
the discussion when I was involved in setting them, it was made
quite clear that would be totally unacceptable politically, that
you could not have a new SPS scheme, when old schemes were paying
out pretty much as the window opened in December, and expect our
customers to be able to wait—
Q1170 Chairman: So it was a political
decision that the tighter timescale was the preferred one?
Mr McNeill: That was certainly
the advice I received.
Q1171 Chairman: Can I be very clear.
I want to be very clear on this. When you were talking about the
Ownership Board, can you confirm for the record that you actually
told the Ownership Board that you would have preferred to have
paid out in June 2006?
Mr McNeill: No, I did not say
that, Chairman. What I said was that the targets for the Agency
were a matter for discussion between the Ownership Board support
unit, which was a part of Mark Addison's responsibilities, and
the RPA Agency.
Q1172 Chairman: You were the head
of the Agency.
Mr McNeill: Yes.
Q1173 Chairman: I am not quite getting
it clear between the Ownership Board and the Agency and you as
the Chief Executive. You have just expressed to us a preference
that you would have personally liked to have gone to June 2006,
but you said there was some discussion between the Agency and
I presume other senior people than yourself.
Mr McNeill: Yes, Chairman.
Q1174 Chairman: And the Ownership
Board—
Mr McNeill: Sorry, Chairman, no,
not the Ownership Board. There is a secretariat or a support group
that provides support to the various Ownership Boards for Executive
Agencies within Defra and it is the communications between the
Chief Executive and the Agency senior team and the ownership board
unit as to what targets might go forward to the Ownership Board
and then to Ministers.
Q1175 Chairman: What I am trying
to understand is the input of the Agency's representatives into
the process of deciding what the payment window or timetable was
going to be. You made it very clear to us a moment ago that your
personal preference would have been for June 2006, is that right?
Mr McNeill: Had it been possible,
yes.
Q1176 Chairman: Had it been possible?
Mr McNeill: Yes.
Q1177 David Taylor: Had it been politically
possible?
Mr McNeill: Yes.
Q1178 Chairman: When you say had
it been politically possible, the impression I am getting is that
the timetable was handed down to you with no discussion as to,
"What do you think, Mr McNeill, we could do?" Do you
understand why I am asking these questions?
Mr McNeill: I do, Chairman. Perhaps
it would help if I explained. The legal payment window for SPS
2005, as you know, Chairman, is from the start of December 2005
to 30 June 2006. Facing what we faced it was a subject for discussion
at the time of putting forward the targets to the Ownership Board,
et cetera, and I was present at the discussion with the
Ownership Board unit, the secretariat or the support service to
the Board, on would it be possible to move the SPS payment targets.
Our targets previously had been to make CAP payments at the start
of the payment window, but obviously with this being a new SPS
scheme with the associated risks, the learning curve, the Change
Programme and all the rest, we did have a discussion, which I
was present at, as to whether it would be possible[8],
and we were advised it would not even be considered because obviously,
and quite rightly—I can understand the point of view—it
was the case that farmers had an expectation having had the payments
made, particularly for the last few years, almost as soon as the
window opened or very shortly after. It would be financially unacceptable,
as indeed the difficulties we have experienced with SPS demonstrate,
for farmers to wait until June for payment. That was the only
point I was trying to make, Chairman. Legally the window is from
December until the end of June but expectation and political understanding
of that expectation is that farmers expect to get their money
at the earlier stage.
Q1179 Mr Drew: If we could go on to the
dynamic hybrid model, whose idea was it?
Mr McNeill: I think I am right
in saying that I had practically no input into that discussion.
We fielded a number of the best people that we could for that
policy discussion.
8 Note by witness: "to move the bulk of
payments to the end of June 2006". Back
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