Examination of Witnesses (Questions 240-259)
DEPARTMENT FOR
ENVIRONMENT, FOOD
& RURAL AFFAIRS
AND RURAL
PAYMENTS AGENCY
MONDAY 9 JULY
2007
Q240 Mr Dunne: Did the need to achieve
Gershon efficiency targets have any bearing on the fact that it
was managed, as you say, on a centralised standards basis rather
than on what would perhaps have been a more efficient basis from
the farmers' point of view?
Johnston McNeill: It was not a
Gershon issue as such. There was an issue with local contacts
and with the ability to deal with inspectors who were based at
local offices where problems might arise regarding the maps. Clarity
was sought on where fence lines were and so on, to enable the
mapping to be put in place. When a farmer raised a query that
required an inspection, the inspector was able to go back and
sit beside the mapper, and explain the issue and how it had been
resolved. That was an advantage.
Quality of jobs was another issue. Moving
to a task-based approach in the organisation involved moving away
from people who could deal with complete claims, with the job
satisfaction and direct customer contact that that carried with
it. The decision to do that was taken as a result of the PricewaterhouseCoopers'
Report. The attempt was made to ensure that other quality jobs
were available in offices, along with chances for promotion and
experience.
Q241 Mr Dunne: With the benefit of
hindsight, would you have recommended that the Gershon exercise
be put on hold for your Agency, until the problems were sorted
out?
Johnston McNeill: The unfortunate
situation was that to get the PricewaterhouseCoopers' programme
from 2000 through the Treasury, and to get funding in place, the
overarching business plan had to be delivered, with efficiencies
based largely on Gershon. The Department's efficiency objectives
were largely placed on the RPA's shoulders.
Q242 Mr Dunne: Is that a yes or a
no?
Johnston McNeill: The answer is
that, because the money had been paid by the Treasury, we could
not get away from the Gershon responsibilities. We sought the
efficiencies and benefits that the Gershon review was supposed
to produce in the following financial years.
Q243 Mr Dunne: Clearly, however,
there were no benefits in terms of achieving SPS delivery on time
and on schedule. It ended up costing the Government more than
£300 million. That could be said to have been short-sighted.
Johnston McNeill: On cost overruns,
we started out to build a three-bedroomed house but it became
a five-bedroomed house. Changing any major programme midway has
nugatory expense, so we obviously had to spend money that we did
not see the benefit of. We achieved a lot nevertheless, as I mentioned.
In relation to the other parts of the £300
million that you mentioned, they came after my time, but there
were disallowance issues and the Department decided that an interim
payment would have to be made to get funds to farmers. With that
came a disallowance cost, but we knew about that in January 2006,
because it was a subject of discussion with the Permanent Secretary
and others while I was there.
Q244 Mr Mitchell: You agreed, I think
in answer to the Chairman, that England uniquely adopted an over-complex
system that was difficult to implement. Is that correct?
Johnston McNeill: I am not sidestepping
that question, but as I was not involved in the discussions with
the Secretary of State and was not close to the political imperatives
that were being met by the decision, I cannot really comment.
Q245 Mr Mitchell: Nevertheless, it
was a complex system.
Johnston McNeill: Absolutely.
We can agree on that.
Q246 Mr Mitchell: Were you consulted
on whether to adopt that system or another, and on whether the
RPA could actually carry it out?
Johnston McNeill: Not really.
We were asked in very broad terms whether, if we went down that
road, the system could be delivered.
Q247 Mr Mitchell: And you said?
Johnston McNeill: We said that
it would be very high risk, and that the more complex it was,
the higher the risk would be. The advice from Accenture, and the
general feeling, was that it would be possible, although difficult.
The more complex the system, the more the levels of confidence
reduce.
Q248 Mr Mitchell: In giving that
advice, were you influenced by the effects of the Gershon cuts
on your staff and on personal contact with the farmers? Were those
taken into account when that advice was given.
Johnston McNeill: No. What was
clear was that in those discussions with the Department, we also
made the point that that would have significant financial consequences.
If it wanted to deliver, obviously we would have to take numerous
steps. We would have to pay Accenture more; we would have to consider,
as I mentioned, de-scoping or using manual workarounds with lots
of staff instead of a system. We made it clear that a lot of costs
would flow from that decision.
Q249 Mr Mitchell: So you warned that
you would have to take on extra staff—as you did—which
would effectively cancel out the savings from Gershon?
Johnston McNeill: We said that
there were likely to be significant cost implications, but yes,
it would mean that Gershon would be affected.
Q250 Mr Mitchell: But were you saying
that you could not carry it out without extra staff?
Johnston McNeill: We said that
there would be consequences, from staffing issues to additional
system cost development issues to consultancy costs, because the
programme would take longer. We pointed to various areas of cost
that would be incurred, but we did not go into exact detail, because
it was not until the policy became clear that we were able to
go to Accenture, for example, and say, "This is what we require;
now here's change request 247," or whatever it was. Accenture
would say to us, using the estimation model agreed in the contract,
"That's going to cost you £180,000," or £250,000.
So we were able to cost it as we went through and say to the Department,
"This is the cost."
Q251 Mr Mitchell: So your needs would
be acceded to.
Johnston McNeill: Yes.
Q252 Mr Mitchell: Can you tell us
from memory whether the cost of the extra staff in fact cancelled
out the Gershon savings?
Johnston McNeill: I am sorry,
I honestly do not have that information. The Rural Payments Agency
would certainly have it.
Q253 Mr Mitchell: Your position,
therefore, is that you were asked to do something and you said
that you thought it could be done, although it was a high-risk
strategy. But surely it is civil servants' duty not only to do
what Ministers want but to warn when it cannot be done. You seem
to have failed in that responsibility—the warnings clearly
were not heeded, and were therefore probably not strong enough.
Should you not have said more loudly and clearly—was it
not your responsibility as a civil servant to say loudly and clearly—"It
can't be done"?
Johnston McNeill: Based on what?
Q254 Mr Mitchell: Based on your knowledge
of the area, the Department, the procedures and the complexity
of the system.
Johnston McNeill: Well, let us
look at that. I had an IT supplier who said, "We can do this."
I had consultants who said, "We can do this." I had
a management team that said, "This is a bit hellish, but
we can probably just about do it." I had a Department that
said, "We can fund it," so I could not say, "We
can't do this, because we haven't got the funds." On what
basis, exactly, would I turn to the Secretary of State who had
just had achieved the No. 1 major change in CAP reform and say,
"We cannot do that"?
Q255 Mr Mitchell: The responsibility
was yours, because you could carry the can. We in our turn have
a Secretary of State and a Permanent Secreatry saying to us, "It's
your fault," because you said that it could be done and you
did not do it.
Johnston McNeill: We said that
it could be done, but it was extremely high risk, and it would
be much simpler if you went for a much less complex scheme. That
was what we were saying from day one. The fact is that it was
nearly done, in that we started the payments in February. We had
said that we would do that a year before, so the programme management
and project management were actually very good. We said that we
had to define entitlements in February 2006, and we did; that
we would start payments in February 2006, and we did.
Q256 Mr Mitchell: Did you take any
account of the fact that there were 21 policy changes in the process
of doing it? Were you consulted about any of them?
Johnston McNeill: No. That was
the problem. From the time the decision to go was taken until
August 2004, when they notified the commission what way they were
in fact going, we were constantly pointing to changes in policy
and saying, "This is making it yet more complex, more difficult
and more challenging." Confidence levels were at 40% in the
middle of 2005—that was known—but at the end of the
day, it was still doable, just about.
Q257 Mr Mitchell: But you still went
on saying that it could be done. The briefings for Lord Bach call
on the Minister to carry the can, by the way, so somebody has
to carry it, even though Tony Blair said that it would not be
carrying the can but just moving along for further responsibilities,
which have never materialised. The briefing for 21 September 2005
said: "all work streams remain on target to complete processing
activity in time to facilitate an end-February start date for
making payments." That was your prediction six months before.
Johnston McNeill: At that time,
those work streams probably were on target.
Q258 Mr Mitchell: No, that had changed,
because by 23 November, the objective had changed to: "We
continue to work towards full payments starting by the end of
February." In other words, "We are not saying that we
are going to do it, but we are working towards doing it."
That is a much lower target.
Johnston McNeill: Yes, but delivering
a major change programme with IT development and the introduction
of various sections of system is not a linear process. A certain
piece of IT has to be delivered, slotted in and made to work,
then it has to be utilised having been tested out. It is extremely
complex and challenging. The level of confidence can vary almost
month by month. We could be worried about the testing levels,
perhaps, if it has not proved as good as it might—
Q259 Mr Mitchell: I appreciate that,
but Ministers are in a bubble, where news does not reach them
that you are facing all these complex problems—
Johnston McNeill: I am sorry,
I cannot accept that. Lord Bach was fully briefed on where we
were and took a particular interest, as I think he said himself
in his evidence.
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