Examination of Witnesses (Questions 220
- 239)
WEDNESDAY 30 APRIL 2008
MS HELEN
GHOSH, MR
BILL STOW
AND MR
STEPHEN PARK
Q220 Chairman: Can I interject and
ask you a question. When, in December 2005, the Vision Document
came out and we published a report on it and other commentators
mentioned the lack of any reference in that document to food security,
your department, along with the rest of government, was dismissive
that this was not really an issue. That was only about two and
a quarter years ago. Why were you so dismissive of it as an issue
then and so enthusiastic about doing something about it now?
Ms Ghosh: I think people use the
term "food security" in a variety of different ways.
Sometimes it is used to mean self-sufficiency—should the
United Kingdom be self-sufficient in certain kinds of food—and
this Government has consistently taken the view that in a free
market world, given the trade flows that we have, the issue is
not how much do we produce domestically but is there a ready supply
of food available through the normal trading routes that we normally
use? I think it is completely true to say that the issue of food
security in, if I may call it, the new sense, the increased demand
particularly from the developing economies for wheat, for meat,
differences in consumer patterns in this country and elsewhere,
has made the issue of food supplies internationally extremely
important, and I think that is why both the Prime Minister and
Hilary Benn are very interested in this broad issue, and that
is how the incoming Chief Scientist has framed the debate: not
self-sufficiency, but how can we ensure both in this country there
is good food available at a reasonable cost and internationally.
In fact, I have to say, policy develops, strategies move on, events
change. That is how we are framing the debate.
Q221 Chairman: Beautifully taken
from the "line to take" document about these things.
Ms Ghosh: Not at all.
Q222 Chairman: I think it is, because
the commentators at the time in 2006, when comment was passed
on the Vision Document, did actually make the distinction between
self-sufficiency and security of supply. The obvious drivers of
demand, the developing nations were known about and yet there
was, effectively, a dismissal of this as an issue, and I am interested
to know what are the factors that have suddenly alerted the centre
of government to something which other experts were flagging up
when that Vision Document was first produced? What has changed?
Ms Ghosh: I take it, by the way,
you are talking about the CAP Vision Document.
Q223 Chairman: I am indeed. Unless
you have produced any other ones that we were not aware of.
Ms Ghosh: No. Of course, we have
always been conscious—the "F" in our name stands
for food—of the issues around international food supply.
We believe that the approach that we set out in the CAP Vision
Document, and which we will be carrying forward into the health
check and into the debates over the coming five years or so over
CAP post 2012, all argue in the direction of anti-protectionism
and, as far as possible, free and open trade, and that is the
approach that we are taking in the international debates about
trade. We have consistently, through the period both from the
Vision Document through the proposals we are putting together
now on CAP health check, had those issues in mind. I do not think
any commentators in autumn/winter 2005 would have been able to
predict—and I think it is instability—the fluctuations
in the cost of certain staple goods that we have seen recently,
and what we are doing is monitoring both inputs and outputs, the
inputs into agriculture in terms of fertilizers, and so on, and
the outcomes in terms of wheat prices and, therefore, the prices
on animal feed, and what we are doing, which is what a flexible
and responsible department should do, is responding to that by
working closely with other departments and with international
institutions.
Q224 Miss McIntosh: Now that we have
established they are your priorities, should you not be seeking
to increase the budget rather than decrease the budget for climate
change and food security?
Ms Ghosh: As I discussed in this
committee before, there are a variety of ways in which the UK
is going to achieve its climate change objectives. A comparatively
small lever is how much we spend, although we are actually, in
financial terms, maintaining our spending on climate change areas
but, I think probably even more importantly, putting more and
more of our staff resource and, as it were, intellectual resource
into the issue. In terms, for example, of international negotiations
and what we can achieve in the next phase of Kyoto, that is about
people. It is about people, it is about influencing, in terms
of using the best evidence that we have got, and we already have
a wonderful evidence-base, that we are always building on, on
climate change through places like the Hadley Centre, so that
is our number one approach. We are putting significantly more
money on the domestic side into the Act on CO2 Campaign, because
clearly behaviour change domestically is the way that we achieve
the kind of system behaviour change that we need. We are continuing
to finance organisations such as the Carbon Trust and Energy Savings
Trust, who have had significant increases in recent years. The
Energy Savings Trust, for example, we are getting now to focus
on the Green Homes Scheme. So we are putting a lot of money into
climate change, but the fundamental thing we need to do as a department
and as a government is influence internationally and make sure
that the policies that we have across the UK Government fit with
achieving our overall climate change objectives. Of course things
like the Climate Change Bill currently going through would be
another key tool. So it is not so much money, it is how we focus
people, arguments and campaigning.
Q225 Miss McIntosh: I will think
about that one. Why is the department forecasting an overspend
of £155 million for the period 2007-08?
Ms Ghosh: I am happy to say, as
indeed I suggested when I came in front of the committee last
autumn, I think it was, that we are not forecasting an overspend.
That was very much a mid-year position. As a result of the financial
controls and some of the reprioritisation we put in place, we
are optimistic that we are going to come in with a balanced budget
in 2007-08. That has been helped by the fact that, for example,
we have over achieved on our head-count reduction target. We had
a head-count reduction target of about 1,400. We have achieved
about 1,600 thanks to efficiencies as a result of improvements
in the Rural Payments Agency, so we are not forecasting an overspend.
Q226 Miss McIntosh: So the figures
you published alongside the 2008-09 main estimate report showing
an outturn of 3.973 billion is not valid? In the Spring Supplementary
Budget published in February this year, the department reported
a total budget spend of 3.818 billion for 2007-08. Then, publishing
your Supplementary Budgetary Information in April, it showed an
estimated outturn of 3.973 billion.
Ms Ghosh: I suspect, and this
is a discussion that I have had with the Chairman and others,
that what you are talking about there is Estimates, which is very
different from our Departmental Expenditure Limit Budget. The
Estimate is a question of the call we make on Parliament for cash,
which in our case, for example, as we have discussed, is a gross
figure rather than a net figure. What I am describing is the Departmental
Expenditure Limit, the budgets on which we operate within the
department and which was the subject of the hearing we had last
year and the subject of some media speculation. In terms of our
Departmental Expenditure Limit Budget, we are optimistic that
we will come in on balance.
Q227 Mr Gray: I probably completely
misunderstood you, and I am no accountant, but did I understand
you to say that the estimate which was put to Parliament, which
is part of the negotiating procedure which enables you to get
the money which you need to run the department, you are quite
content that that figure should have been 125 billion, or whatever
it was, higher than you are confidently expecting that you will
actually use? Is that what I understood you to say? Where does
this figure 3.973 billion come from? What is that figure?
Ms Ghosh: I think I will ask my
finance director to report.
Q228 Mr Gray: Do, but your main estimate
says your estimated outturn is 3.973 billion, and Anne's question
was why is that different?
Ms Ghosh: From my description.
Q229 Mr Gray: Unless I misunderstood
you completely, and I remember going through these very discussions
when I worked in the department, you said, "Because that
is the figure we use for parliamentary estimates"?
Ms Ghosh: Yes.
Q230 Mr Gray: In other words, that
is the figure you put in in order to try and get Treasury funding
basically. That is what it boils down to.
Ms Ghosh: No. We put that figure
in in order for Parliament to vote us cash. The best example to
use for the purposes of Defra is that we have a cash flow issue.
So, for example, we pay out money on Europe's behalf in order
to pay into farms' Single Payment Scheme and Rural Development
Programme for England, so we had to have a cash flow that is covered
by the cash you give us. We then get the money back from Europe,
but we need to have from you a cover for the cash that we spend,
and I think that is the distinction between the Estimates, the
voted money you give us, and the departmental budget which we
are working on, which is essentially the CSR settlement we get.
In the SR settlements we get, we get a departmental expenditure
limit.
Q231 Mr Gray: I think the technicalities
may be defeating some of us round the table and possibly some—
Ms Ghosh: I suggest we send you
a note.
Q232 Mr Gray: Would it be possible—
Ms Ghosh: I would be happy to
do that.
Q233 Chairman: You can always come
along to one of our regular sessions—
Ms Ghosh: We have tutorial sessions
on this.
Chairman: ---so we would be able to try
and understand these in a little more detail.
Q234 Miss McIntosh: Can I be clear?
If Natural England were to say to the Committee that they had
been kept short, for example—I am not saying they have,
but if they had—
Ms Ghosh: No, they have not.
Q235 Miss McIntosh: ---then you are
confident that the cash flow has succeeded, but this is a mythical
figure?
Ms Ghosh: The Estimates are a
mixture, and this is where I think our tutorial with the Chairman
and some other members was useful. They are a mixture of, as it
were, the budget that we have to spend—whether it is to
give money to Natural England, to give money to Natural England
for their non European activities, to give to Carbon Trust, to
give to the Environment Agency, to run ourselves—it is a
mixture of those things which have to be within our Estimates,
it is money we spend, and then other things which are not within
our budget, of which the biggest item for Defra is the gross amount
of money we pay out on behalf of Europe and then, as it were,
later on we get the money back, that is what creates a disconnection
between the Parliamentary Estimate and what we spend.
Q236 Chairman: Mr Park is going to
enlighten us.
Mr Park: I will certainly try,
Chairman. I think the confusion is the use of the word "estimate",
Estimate as in parliamentary terms, whereas as I think what you
were referring to was an estimate with a small "e" which
comes out of the COIN system. The answer may or may not fit the
question, because we—
Q237 Chairman: You have used a term
there, the COIN system. Would you like to explain to colleagues
what that is?
Mr Park: I will certainly try.
My apologies if this gets too convoluted.
Q238 Chairman: We will stop you if
it does.
Mr Park: Thank you. The Treasury
obliges all departments to submit monthly inputs of data that
track the spend in the department against the control totals and
against the Estimates. So COIN is a monthly return that we put
in which, as well as reporting what we have spent, also reports
what we will spend for the year, so an estimate of outturn rather
than a parliamentary Estimate.
Q239 Miss McIntosh: Just to be clear,
you published one figure in February in the Spring Supplementary
estimate for 2007-08 of 3.818 billion. Then, two months later,
in the Treasury's supplementary budgetary information, Defra showed
an estimated outturn of £3.973 billion. If I have followed
the Permanent Secretary's answer, surely in those two months there
would not have been an overspend as you have just said. On your
own figures that you supplied to the Treasury there is overspend
of £155 million.
Mr Park: I am sorry, Chairman,
I do not have the comparison between the Spring Supplementary
Estimate and other numbers here. I think it would probably be
better if we gave you a written response.
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