Supplementary memorandum submitted by
Johnston McNeill (RPA Sub 19)
Letter from the Committee Assistant to
Johnston McNeill
As the Clerk said to you, the Sub-committee
was unable through a lack of time to ask about the decision not
to recommend part payments to ministers in January 2006. We would
be very grateful if you could address the following questions
in writing. Please feel free to add any further information you
think that the Committee would find useful:
— What was your role in the meeting(s)
in January 2006 that decided not to advise Ministers to make partial
payments, and what view did you express? How was the decision
finally made?
— What advice and assessment were Ministers
given in January and February 2006 about the respective chances
of success of opting for an interim payment at that stage or pressing
on for full payment in February 2006, as planned? What information
was that assessment based on?
— Do you agree with Helen Ghosh that
in retrospect ministers should have been advised at that point
to agree interim payments?
More generally, if there are any supplementary
points you wish to make to expand on your evidence please feel
free to send it to us. You mentioned to the Clerk that you would
like to make a further point on Mrs Beckett's reaction to the
two month delay to the start of payments in February 2006 that
was decided at the turn of 2004-05. The Sub-committee would also
be glad to receive that information.
Letter from Johnston McNeill to the Committee
Assistant
Here are my comments to the questions in your
note of the 16 January.
I was involved as C/EX of the RPA and as joint
chair of Capri and a member of the Executive Review Group chaired
by the permanent Secretary. I shared the view with all of the
others present (and in line with OGC thinking and that of Karen
Jordan the non—exec) that all things considered it would
be better to press on with full payments. No person disagreed
with that view. The decision was taken by Ministers after a full
briefing was given to Lord Bach including a full assessment of
the various risks for the options. My recollection is that all
options carried very substantial risk.
A very major concern about making interim payments
was the level of disallowance that would be incurred if interim
payments were made against un—validated SPS claims. After
my departure the decision was taken to make Interim payments and
provision was made for the financial impact which would then follow
in terms of disallowance. I have to say I do not recognize the
figures. At the time of the decision the level of disallowance
was considered to be much greater and in the 10 to 20% of the
whole CAP payment.
I would not be surprised it Defra wanted to
keep the estimate low as the Commission read all SPS related papers
and reports with great interest and Defra have a negotiating position
to establish and maintain. Something which has not come out to
date which was well known to all at the time was that to err in
making Interim Payments in the first year may attract some sympathy
in the first year of a new CAP scheme but to repeat the mistake
in the second or subsequent years would incur serious EU wrath
and significantly increased Disallowance. So to proceed with Interim
payments for the 06 SCS scheme is likely to prove very expensive
in disallowance terms.
Another major consideration at the time and
reflected fully in briefing was that to deflect staff from making
full payments on RITA to making interim payments would obviously
slow down the making of full payments but would also run one scheme
process into the next years scheme process making the task of
making 06 SPS payments a very major challenge and as a consequence
raising the need to make yet more Interim Payments and so on with
each year incurring disallowance for payments against unvalidated
claims.
Given hindsight I understand Helen's comment
that we should have agreed interim payments but I am not convinced
the full impact of doing so in Disallowance terms to the public
purse has been fully stated. The potential cost was considered
to be much greater in my time. Whilst the RPA failed to make the
"bulk" of claims by the end of March 2006 it was still
very possible that continued focus on the RITA full payment would
get the payments out by the end of June 2006. As RPA staff were
deflected in volume onto partial payments we shall never know.
It was an Accounting Officer/Minister call.
Make partial payments and most certainly incur major disallowance
and cost to the public purse or keep the faith with RITA—with
the strong possibility of full payments delayed until end of June
with the subsequent political backlash from very unhappy farmers.
It has been noted by others but Stakeholders
were very clear they would much prefer full SPS payments even
if later in the payment window.
On the point on Mrs Beckett's reaction to the
two month delay I should note that we at the RPA were very surprised
at her reaction given:
The delay was a clear consequence of Ministers/Policy
Makers not defining SPS policy in the required timeframes and
adding to SPS complexity with apparent disregard of the ongoing
increase in risk to successful delivery;
That given the many detailed briefings Lord
Bach had been given by RPA and senior Policy colleagues she seemed
to be unaware that the RPA had moved heaven and earth to get SPS
delivered even in the delayed timetable proposed;
That she should be in public be so unsupportive
of RPA staff that were working very hard—as noted by many
giving evidence—to deliver SPS.
January 2007
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