Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 18 JULY 2007
MS HELEN
GHOSH AND
MR STEPHEN
PARK
Q80 (18.07.07) Mr Williams: If I
could move on now really to the old chestnut of the Rural Payments
Agency and the Single Payment Scheme. We were told during our
inquiry by the Chief Executive, Tony Cooper, that his objective
was for the Single Payment Scheme to be stable by 2008. Do you
still expect that to be the case?
Ms Ghosh: We have done, as you
know, much better this year but not as well as we should have
done, particularly in terms of customer service. We had paid out
98% of the money by the end of June. We have recently set and
I think announced to Parliament his targets for what would be
the 2007 scheme, to have paid 75% by the end of March and I think
90% by the end of May. So we are setting him tight targets for
next year and we are hoping that by 2008 we will be able to bring
that target back even further towards December, which we know
is the preferred date of the farming community itself. So we think
it will continue to get better. Whether it will be a performance
by the 2008 scheme which completely meets what farmers want or
not, obviously we will work hard for that.
Q81 (18.07.07) Mr Williams: I do
not quite understand what "stable" means in this context.
Ms Ghosh: It means that we can
say, "This is when we are going to be able to pay you, and
we will be able to pay you on this basis at this time every year,
and we will be able to give you a decent level of service. So
you will be able to ring us and get somebody who understands your
claim and who will reply to your letters, what you would regard
as a decent customer service."
Q82 (18.07.07) Mr Williams: But even
if you brought it back to December you would not be meeting the
same type of delivery that other devolved nations?
Ms Ghosh: I do not know whether
you can pay before December, but the payment window is December
of the year to June of the following year. I think some people
were paying in advance, but I do not understand how you can within
the EU Directive.
Q83 (18.07.07) Mr Williams: On 1
December many countries were able to put out full payments.
Ms Ghosh: And that, as this Committee
has discussed, is largely because they had chosen a different
system. Our objective will be to make the payment as early as
possible in the payment window and that is what we are working
towards.
Q84 (18.07.07) Mr Williams: In other
words, to get to the situation where English farmers are not second-class
citizens within the Single Payment Scheme?
Ms Ghosh: Absolutely.
Mr Williams: Thank you.
Q85 (18.07.07) Lynne Jones: A little
earlier when you were asked what were your incentives to achieve
the headcount target you said because you had got to do it. There
are lots of "We've got to do it" in relation to the
RPA and the delivery of the Single Payment Scheme and the threats
of disallowance, but that did not lead to achievement, so I did
not find it very convincing to say that just because you have
got to do it you will achieve it.
Ms Ghosh: There are very many
differences between achieving a headcount reduction and delivering
a highly complex project like the RPA. In some senses it is a
very clear objective. We have experience from other departments.
I have been involved with similar schemes in other government
departments. We have had lots of discussions both with the trade
union side and with colleagues in the Cabinet Office about experience.
Running a VER/VES scheme, engaging with staff and giving projections
about how we will achieve our headcount reduction is a pretty
well-worn project process. I think what we have lacked historically
is that first of all we were thrown off course by events at the
RPA, but it seemed a long way away at the beginning of the SR
04 process. There were lots of policy pressures on us. In fact,
we acquired people rather than lost people in the early stage
of the SR 04 process. I can assure you that alongside a very good
project plan and an almost day by day set of milestones our minds
are wonderfully concentrated.
Q86 (18.07.07) Lynne Jones: There
were proposals to reduce staff as part of the change programme
in the RPA, but you said something about the RPA not being touched,
so what is the situation with staffing at the RPA?
Ms Ghosh: The agreement that I
have with Tony Cooper is that what he is doing at the moment—and
this is partly in response to comments from committees such as
this one—is making the maximum use of permanent staff wherever
he can. He is maintaining the overall staffing levels, and indeed
he takes on casuals for some peaks of work, but on the whole he
is maintaining levels and the deal is that through the CSR 07
period as the organisation becomes more stable we will be able
to take the headcount and administrative savings out of the RPA,
but we will not do that until we are sure we are on track for
stability.
Q87 (18.07.07) Lynne Jones: Are ultimately
the targets from the original change programme what you are still
going to try and achieve?
Ms Ghosh: No department, including
our own, has headcount targets for the CSR 07 period. What we
have is the five per cent, five per cent, five per cent administrative
cost target, so that is what we have to achieve. One element of
that will be reducing headcount and getting ourselves in the right
shape for the future.
Q88 (18.07.07) Lynne Jones: And some
very important functions that you have still got to achieve?
Ms Ghosh: And some very important
functions, particularly in the licence to operate areas, that
we still have to achieve, so that is what we will be doing, but
we are not tied to a specific headcount reduction.
Q89 (18.07.07) Mr Williams: Lynne
mentioned disallowance and you have given us a figure for a provision
for disallowance for the 2005 and 2006 scheme. At what point will
the cost of any disallowance be met by Defra itself rather than
the Treasury?
Ms Ghosh: It is all now on our
DEL. Historically it was on our AME, meaning the demand-led bit
of Government accounts. So from now onwards—and this even
goes back to historical disallowance that does not relate to the
SPS—it will be on our budget and we have to meet it, so
we make a provision that is described and we are working very
closely with the NAO and indeed with the Commission on whether
that was the right figure or possibly too much given some of the
improvements which have been made since, and one of the elements
of the CSR settlement is to make sure we have got the right amount
of money, or a prudent amount of money in the budget for dealing
with disallowance going forward. It will all fall on our budget.
Q90 (18.07.07) Mr Williams: Disallowance
on some of the previous schemes outside the SPS have already been
agreed with the European Commission?
Ms Ghosh: It is an interesting,
as you will know, sort of dance that goes on. We have not agreed
them. There are proposals in the air about some previous schemes,
but they do not add to the 300 provision that we are describing
because that related to those two years.
Q91 (18.07.07) Mr Williams: But at
what point will the Defra budget be compromised?
Ms Ghosh: When we have not final
agreement with the Commission on what the final amount is. We
are making the provision, looking forward, to make sure we have
got enough money to cover what seems to us to be a reasonable
amount. Stephen, do you want to say a little bit more about the
way we are trying to work through that?
Mr Park: It is really a question
of making sure that we can mount a robust defence in terms of
why the performance of the RPA over the last few years has been
what it has, and making sure that we can give the evidence to
the Commission as to any apparent failings were justified because
of certain cases. As I say, it is really a question of mounting
a robust defence to make sure that it saves the taxpayer the money.
Q92 (18.07.07) Mr Williams: Is this
adding a deal of pressure to the Defra budget?
Ms Ghosh: Insofar as we need to
make provision for it in the CSR, in that sense it does. In fact
in our historic and going forward baseline, the baseline that
will be, as it were, phrased in the CSR, we have some provision
for disallowance just for historical reasons. The question is,
do you need to add more to that, the kind of disallowance that
might arise through the period? So it is a pressure to build into
CSR 07.
Q93 (18.07.07) Chairman: I think
again this is an area where a note may be called for, because
we have looked at the provisioning for disallowance and we appreciate
that you have to estimate a worst case scenario, but I am not
clear whether the Treasury has given you additional money to cover
this against the previous situation where it was the Treasury
that paid the Department, because either you are going to find
yourself in clover, in theory, if somebody has given you extra
money to cover it, in other words if you have got a liability
in your books, or if you do not have to pay that does the Treasury
claw back the extra? Upon that note, I am going to suspend the
Committee and adjourn.
Ms Ghosh: We will respond briefly
on that when you come back.
The Committee suspended from 4.36 pm to
4.50 pm for a division in the House
Q94 (18.07.07) Chairman: At this point,
would you like to finish your observations?
Ms Ghosh: I will try and keep
it very simple. The answer to—I cannot remember whether
it was Mr Williams's or the Chairman's question—is that
as and when the wheels of God have ground in the Commission and
the Court of Auditors and we are told what the actual figure for
disallowance around SPS 05 or SPS 06 we will actually have to
find real money from our budgets, which is why we have to make
a forward estimate of that and build that into the CSR. The provision
element is very much within the sort of parallel world of parliamentary
votes, but the short answer is that we have to find the money.
Q95 (18.07.07) Chairman: I think
we would like a bit more explanation about that because we are
not clear as to whether it is coming out from an already agreed
global total or whether the Treasury gave for this current financial
year some additional funding to cover because, as I say, previously
it had appeared to the Committee that it was the Treasury that
met the bill. So perhaps given that there are two financial years'
worth of disallowance provision -
Ms Ghosh: Yes, we will describe
how that rolls out. We do not get extra money from the Treasury,
as we would have done in the old days under the AME system, but
we have some built into our baseline.
Chairman: I am conscious that we have
nine minutes left and Madeline Moon has come back specially to
ask you a question about your PSA agreements on Sites of Special
Scientific Interest.
Q96 (18.07.07) Mrs Moon: I am aware
that the PSA requires you to have 95% of all nationally important
wildlife sites in a favourable condition by 2010. We seemed to
be missing the target in May of this year. We are down to 75.4%
when we should be at 78 per cent. How do you feel you are going
to be on course for March of next year? Do you see yourself being
able to get to 83% then?
Ms Ghosh: For the reasons I think
we set out in the original report itself, yes, there was some
slippage against the milestone. For a variety of reasons, some
around the organisational change at Natural England, some around
other pressures on the Environment Agency, we slipped slightly.
We are picking up again, so I think by July this year we were
back up to 75.5. We are confident—and this is very much
talking to the Environment Agency—that we will be able to
recover that this year, and that is a combination of focus from
Natural England, the monies coming through under the ELS and HLS
and co-operation with many of the owners and with the Environment
Agency. So we are confident that this is a PSA which is on track.
Q97 (18.07.07) Mrs Moon: So you feel
that part of the problem lies with the Environment Agency?
Ms Ghosh: It is just the case
that in some of the SSSIs there are issues that are also part
of the Environment Agency's remit, whether it is about water management
or whatever it may be, and I know that Barbara Young and Helen
Phillips are working closely together on these. It is not a clash,
it is simply that we need to make sure that they are co-ordinating
well together, and I think that is all going ever better.
Q98 (18.07.07) Mrs Moon: There are
many environmental organisations who would argue that perhaps
the problem is much more around the financial problems in Natural
England and the problems with their budget and the management
of their budget. How would you respond to that?
Ms Ghosh: Again, we have talked
to Natural England and the Environment Agency, but in particular
Natural England on this. In fact, we discussed this, I think,
at the Departmental Report hearing last year. The funding reductions
we were unfortunately required to make in the middle of the year
and the money they offered to us was not mainly coming out of
this pot. It did not mainly impact on this. There was some small
element where it impacted on this, but in fact they were able
to find funding from other pots around access, for example. So
it had a small impact, but not a large impact.
Chairman: Lynne, you have got
five minutes on fuel poverty.
Q99 (18.07.07) Lynne Jones: Yes.
It is another of your targets where you say you have got slippage.
What are the findings of the Fifth Annual Fuel Poverty Progress
Report? They have not been published yet, but presumably you are
aware of what is happening on that front?
Ms Ghosh: Yes, indeed, and this
is an area clearly where we need to be extremely clear about how
we take our strategy forward into the CSR 07 period. Really to
rehearse what has happened so far, we have been spending more
each year on Warm Front, which is one of the levers we had. I
think we spent £800 million over the period and £350
million this year compared with the £300 million last year.
That has actually improved fuel efficiency for about 1.4 million
households. At the beginning of the SR 04 period we were doing
very well, as the report says, in terms of lifting people out
of fuel poverty. The increases in energy prices in 2005 and 2006,
frankly, have pushed some people back in again and having got
the group down to about one million, we probably think it has
doubled again since then. So it is a target which is moving away
from us, which is why we have consistently targeted it as red.
As I said, it was a red performance. We have done two things to
kick off the sort of process for how we take this into CSR. We
clearly need to engage other relevant departments because it is
not just a question of Warm Front money going in, it is also issues
about fuel prices themselves and it is a question about income.
So before the reshuffle our ministers had a meeting with all the
ministers from the relevant bodies, other government departments,
Health and DWP in particular, and colleagues in DBERR, who obviously
sponsor the energy industry, and said, "What collectively
can we do about this?" Hilary Benn is also very keen to take
that up because he sees that this is a very key issue in terms
of social equality and poverty issues, and we will need to stick
together a sensible package. It is not just a matter of putting
more and more money into Warm Front because it could be that we
put lots of taxpayers' money in there and fuel prices move away
from us. So we need to have a really consolidated cross-Government
action on this, but we are taking it very seriously.
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