Examination of Witness (Questions 1200-1219)
MR JOHNSTON
MCNEILL
15 JANUARY 2007
Q1200 Lynne Jones: That was between
you and Andy Lebrecht. You were the most senior people on CAPRI.
Mr McNeill: Andy Lebrecht and
I joint chaired CAPRI. He was the SRO for policy, I was the SRO
for operations.
Q1201 Lynne Jones: If you were discussing
it in CAPRI how did that message get to ministers? When Margaret
Beckett announced that there were going to be three regions, not
two, did she know that the staff responsible were saying, "This
is making it less likely that we will be able to deliver and more
likely that we will be in non-compliance with EU regulations"?
Mr McNeill: I cannot comment on
that, I do not know what Andy Lebrecht said to Margaret Beckett.
I do not know. I would have certainly thought he must have done.
Q1202 Lynne Jones: So the RPA per
se, you and your people, were not saying that to ministers?
Mr McNeill: In my time in the
RPA I met Margaret Beckett twice, and the second time was when
I was dismissed.
Q1203 Lynne Jones: Okay, well when
you were talking to the other ministers were you or your staff
expressing any concerns about the deliverability?
Mr McNeill: If you were to look
at the reports that went to Lord Whitty and the OGC reports and
other information and if you looked at the discussions at the
CAPRI board, the reports which I gather now some senior officials[12]
at CAPRI say they did not quite understand, which were of an agreed
format, I do not think we could have said it any clearer.
Q1204 Lynne Jones: So nobody told you
that they could not understand your reports?
Mr McNeill: Absolutely not. Those
reports were developed by the CAPRI[13]
Board. We are talking about a number of directors-general and,
indeed, the DRG permanent secretaries. I find it extremely difficult
to know how any experienced senior management could not understand
the reports. It really does surprise me.
Q1205 Lynne Jones: You would have expected
Andy Lebrecht to report to his seniors in Defra that these reservations
were being expressed at CAPRI?
Mr McNeill: And the concern about
the increased risk. I accept fully we never said, "This is
not do-able" but we did make it clear that the more complex,
the more risk.
Q1206 Lynne Jones: Did you express
the view, "Why do they keep changing these policies? Why
has she made that decision? Does she realise it is going to make
it more and more difficult to deliver?"
Mr McNeill: I have had, bar two
meetings, practically no contact with Margaret Beckett.
Lynne Jones: But did you ask?
Q1207 James Duddridge: I am surprised
the Secretary of State only had two meetings with you. I understand
her special adviser, Sheila Watson, who has moved with her to
the Foreign office, was heavily involved and, in fact, there are
some indications that the special adviser might have been chairing
some of these meetings. Could you explain what the role of the
special adviser was and what interaction you had with that particular
special adviser, Sheila Watson, and perhaps other ministerial
special advisers?
Mr McNeill: Yes. In terms of Sheila
Watson, my recollection is that she often attended the weekly
briefing sessions that took place with Lord Bach and sat beside
him, or close to him, and was sent all of the associated papers,
the reports et cetera, that related to the programme where
we were on progress towards delivering SPS.
Q1208 James Duddridge: So everything
that went to Lord Bach would have also gone to Sheila Watson?
Mr McNeill: Certainly for the
meetings that she attended with Lord Bach, as I recollect, and
I am sorry but we are going back 10 months now, she was obviously
well informed and had the papers, yes. Whether she received every
paper or every submission that was put up, I am sorry, I could
not say that, but certainly it was made clear to us that she had
a particular interest in this and was to be kept informed.
Q1209 James Duddridge: Were you aware
that Sheila Watson particularly was pushing the dynamic hybrid
model?
Mr McNeill: Because I was not
involved in the discussions about which policy, I do not know
that.
Q1210 Sir Peter Soulsby: Can I just
try once more my question about risk because I want to pursue
that? Mr McNeill, can I just try it again with you. When you were
talking about risk at the time, were you talking about risk of
catastrophic failure or were you talking about risk of not being
able to deliver on time?
Mr McNeill: We never said this
was not do-able.
Q1211 Sir Peter Soulsby: So all along
it was whether you could get it by the timetable that had been
set; there was never any serious discussion about the prospect
that it might not just deliver at all?
Mr McNeill: We had developed a
contingency on the basis that, indeed, there was a second system
relating to partial payments that had been developed on the basis
that we discovered there was some fundamental problem[14]
but, as it was, up until the eleventh hour we thought we were
going to do this. When we started payments and they had gone through[15]
we thought we had done it, and it was obviously a shock to us
to discover we had not. The fact was that were it to prove not
do-able we had a contingency system being developed and, indeed,
a partial payments option. We had prepared for that event[16].
We had reported, I think fairly accurately, up to certainly CAPRI
and ERG, and from there to ministers, progress in a very fair
way in terms of it being down to us to discuss the number of tasks
being cleared on almost a daily basis.
Q1212 Chairman: I think the thing I struggle
with is that you made it very clear to us that it was high risk
at the beginning and it got riskier as time went on because of
the unfolding nature of the policy, but in spite of that the message
that was going through the various channels of communication still
convinced ministers they could go ahead and by 12 February 2004
confirmed to a waiting world that the dynamic hybrid model had
been chosen notwithstanding the risk messages from you. The risk
messages that you put forward were never quantified as a percentage
of hitting it because you said that it was do-able and you also
quoted as a high risk the figure of 40%; which said there was
a 60% chance of it not happening and a 40% chance of it happening.
Did you ever try and quantify for the benefit of Defra what you
meant by "risk"?
Mr McNeill: Yes. I do not know
if you have seen the reports, Chairman, I can only imagine you
have, but we had a very sophisticated risk assessment model that
was included in all of the papers that went to CAPRI and then
to ERG. Have you seen that, Chairman?
Q1213 Chairman: I personally have
not seen that one.
Mr McNeill: It was developed by
Angus Ward of Bearing Point who was the programme manager for
the programme, and I have to say it was a particularly sophisticated
approach to assessing risk.
Q1214 Chairman: Did it generate something
in statistical terms that as a layman dealing with risk matters
I would understand?
Mr McNeill: I would say it was
not that complex. I have to say the presentation of it would have
been easy to understand.
Q1215 Chairman: Let us come back
then to the results that it delivered. When you said that the
programme was high risk at the beginning and then got riskier,
can you quantify for me what the numerical assessment of risk
was as this complexity grew?
Mr McNeill: No, Chairman. This
is similar to the question you asked before, "Did we turn
round and say `This is 40% likely, this is 30% likely' or whatever",
no, we did not do that.
Q1216 Chairman: So if you had such
a sophisticated risk model how is it that I cannot, if you like,
feel, touch, have something tangible to enable me to understand
what you mean by the term "risk". I am anxious to understand
the decision making process but against a background where you
were sending out a message which you communicate linguistically
to us that it was high risk at the beginning and got worse, that
Defra still felt comfortable with the reassurance, to pick up
your own phraseology, that "it was do-able". By definition,
if the risk was increasing it was becoming less do-able; still
do-able but less do-able. In other words, there was an increasing
probability that something would cause the wheel to fall off.
Yet on went Defra flat out, an announcement, "This is the
way we go", no awareness that the policy was going to admit
a whole raft of new customers, the people you identified who had
never had any dealings with the RPA, larger numbers of very small
claims coming in, none of the other practical problems. The message
I am getting is that the decision makers were blind to the implications
of what you were saying. Is that a fair assessment?
Mr McNeill: I do not necessarily
think that is fair, Chairman. The CAPRI Board, of which I was
joint chair with Defra DG Andy Lebrecht, (and to the best of my
knowledge he attended pretty much all the meetings, he did not
send somebody else), had frank discussions about the complexity
and risk involved in the dynamic hybrid approach and, indeed,
as then, the risk model I am referring to was once what exactly
was involved in the SPS scheme became clear. The risk assessment
model was more valid in that it was not a moving target of, "Oh,
by the way, we will add this, we will add this and we will add
this". I believe there was an open, frank and assured reporting
of what we understood the risk to be. I have to accept, Chairman,
it was not as mechanistic or perhaps as sophisticated as the one
you are suggesting. In the dynamic timescale we were talking about
I think that may have proven difficult for us. I certainly believe
that there was no doubt, and in discussions with Hugh Mackinnon
and Bill Duncan, who were our lead players in the policy process,
and, indeed, Simon Vry, who was reporting from a RPA change programme
perspective as to what was do-able, that anyone should have been
left in any doubt that this was a high risk programme.
Lynne Jones: The trouble is you could
have a situation where it is high risk, a 99% risk of failure,
but then you say it is do-able and it seems everybody disregarded
the worry about risk because you were always saying it was do-able.
Chairman: It is a bit like saying you
are going to win the Lottery because the odds of winning the Lottery
are 20 or 30 million to one but it is still possible you might
win.
Q1217 David Taylor: What is the difference
between "do-ability" and "possibility"? As
the Chairman has said, possibility can be vanishingly small but
as long as it is non-zero it is possible.
Mr McNeill: This Department understood
that this was a high risk, one of the top high risk programmes
in government, before this started. It then introduced, mid-way
through, a massive change where I had two officials who were adamant
they made it clear this was going to increase risk, and the more
complex it was, the more risk, but that it was still possible
to do it.
Q1218 Chairman: I think we are going
to have to move on because we could be here all night discussing
this. I will summarise it, and tell me if I am wrong because we
must make certain our understanding is correct. You signalled
clearly in your judgment, and professionally, what the risks were
to the CAPRI Board, therefore to the senior officials in Defra,
and one must assume that they accurately transposed that information
in recommendations to ministers. So, from this discussion can
we conclude that Defra were aware of the risks and at a senior
level and at ministerial level they accepted the risks and what
they meant?
Mr McNeill: I cannot comment on
the last part, Chairman, I was not involved in the discussions.
All I can say is—
Q1219 Chairman: But by definition
ministers communicated that they wanted the dynamic hybrid model
against a background of all the information that you had given
them about the project and the change in policy and the complexities
that were involved and against the background of the Change Programme.
You had communicated professionally throughout all of this and
your two key people had said there were mounting risks. If all
of that information was parcelled up in language which Defra senior
officials could understand and which ministers could understand
and ministers made their decisions, by definition that says to
me that at the top of Defra they accepted the risk message from
you but, nonetheless, took the decision to go down the route they
did.
Mr McNeill: Chairman, again I
really do not want to comment on what happened with ministers,
I was not there.
12 Note by witness: Derfa senior officials. Back
13
Note by witness: CAPRI/ERG Boards. Back
14
Note by witness: "with RITA". Back
15
Note by witness: "the RITA system". Back
16
Note by witness: "of RITA failing". Back
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