Examination of Witnesses (Questions 1-19)
DEFRA AND RURAL
PAYMENTS AGENCY
23 JANUARY 2008
Q1 Chairman: Good afternoon and welcome
to the Committee of Public Accounts, where today we are considering
the Comptroller and Auditor General's Report: A progress update
in resolving the difficulties in administering the Single Payment
Scheme in England. We welcome Helen Ghosh, who is the Accounting
Officer for the Department for Environment, Food and Rural Affairs;
and Tony Cooper, who is Acting Chief Executive of the Rural Payments
Agency. I think this is your first hearing, Mr Cooper on this;
am I right in saying that?
Mr Cooper: I came to the one in
October.
Q2 Chairman: Okay. Perhaps I could
start with you, Mr Cooper. In December 2007, if you look at paragraph
7, on page 5, apparently you still did not have any idea whether
the payments made for the 2005 and 2006 Schemes were right or
not. That was in December 2007 and we are talking about payments
made for 2005 and 2006; is that right?
Mr Cooper: We have done a lot
of work to make sure that on the basis of the 2005 and 2006 Schemes
that payments are correct, and that rolls forward into the payments
that we are making for the 2007 Scheme.
Q3 Chairman: I am sure you have done
a lot of work. Apparently, an officer from the National Audit
Office suggested to you that you produce a memorandum for this
Committee which could have informed us whether the payments made
for 2005 and 2006 Schemes were right or not. I think I am right
in saying that no memorandum has appeared?
Mr Cooper: We have not been able
to provide the information yet.
Q4 Chairman: Why not?
Mr Cooper: The analysis that has
been done has not yet come up with figures that are accurate.
Q5 Chairman: When is it going to
be done?
Mr Cooper: Work is currently going
on to resolve the questions over the—
Q6 Chairman: I am sorry, Mrs Ghosh,
this is not good enough. This is the Committee of Public Accounts
and this is a very serious matter. We are now talking about payments
made a very considerable time ago. What I suspect is that this
review will actually show up very large amounts of mistakes and
it is in your interests that this information is not made available
to this Committee.
Mrs Ghosh: I am very happy, Chairman,
to volunteer the information to the Committee as soon as possible,
which I think will be a matter of weeks rather than any longer
than that. It is actually a very complex issue because it is an
inter-relationship, in terms of checking the entitlements of individual
farmers, the impact on accuracy of the partial payments we made
at the time, and the fact that because of the much-discussed with
this Committee problems with the IT system there were changes
made manually. All of that produces a set of errors some of which
amount to overpayments, some of which amount to underpayments,
as the Report itself finds, for a complex set of reasons, but
I entirely understand, and I can assure you we are not seeking
to hide anything. We just do not want to give the Committee something
that is inaccurate. When we have taken those figures to our Minister
we will guarantee that we will give you a note on what are the
latest and best figures we have on it.[1]
Q7 Chairman: When do you think that note
might turn up?
Mrs Ghosh: What would you say,
Tony?
Mr Cooper: I think it is going
to be two or three weeks before we can get to figures that are
reliable.
Mrs Ghosh: So if we could set
a three-week target and commit ourselves to that, we would be
happy to do so.
Q8 Chairman: Normally permanent secretaries
undertake to deliver the note in two weeks. I will give you three
weeks, fair enough—
Mrs Ghosh: Splendid, thank you.
Q9 Chairman: But we want to have
it as part of our Report. Why does it need to go to the Minister,
by the way; it is just a factual statement?
Mrs Ghosh: It is indeed a factual
statement, however there are issues which we have started to discuss—and
we are happy to share this with the Committee—about when
you have identified what the levels of overpayment are by groups
of customer, what your strategy is for recovery. On the one hand,
clearly in terms of Europe, and indeed the taxpayer, we have a
responsibility to get the money back. Equally, we are extremely
concerned and keen that we minimise the impact on customers. I
think it is true to say from the initial work that we have done,
that the proportion of customers who, for example, have been significantly
overpaid looks quite small. It is in the 80%[2]
of people who look as though they are going to have overpayments
of less than £1,000, so I do not think, except in some exceptional
cases, we are talking about large repayments to a large number
of farmers, but clearly ministers have a real interest in how
we now move forward to get the money back, as I know the Committee
will have.
Chairman: I want to ask about overpayments
in a moment but unfortunately we will have to break for a division.
The Committee suspended from 3.37 pm to 3.43
pm for a division in the House.
Q10 Chairman: We are quorate now
so I think we shall start again and, Mrs Ghosh, you were starting
to talk about overpayments.
Mrs Ghosh: Yes and the nature
of recovery.
Q11 Chairman: And the nature of recovery.
If we look for instance at figure 2, in paragraph 2.9, which you
can find on page 11, which deals with overpayments, this is just
for one period, I think it is August 2006, and I was very surprised
when I saw this figure because there were six overpayments of
between £100,000 and £290,000. I was staggered by how
so much money could be made in overpayments and how it could still
not be claimed back. Presumably these are not poor struggling
family farmers, they are agri-businesses and they have been sitting
on over £100,000 for all this time, and this is only for
one month, so presumably there are many more businesses sitting
on a lot more money which has not yet been claimed back?
Mrs Ghosh: I will hand over to
Tony but there was a particularly bad run where, among other things,
we had paid people twice.[3]
I believe it is the case that all of those people know the position
and we have arrangements, but I will hand over to Tony on that.
Mr Cooper: This was something
that happened about eight weeks after I arrived. Our priority
was to make payments, and in an effort to release payments to
farmers who had not had a payment, there was a change made to
the IT system, and the consequences of that change clearly had
not been fully tested and resulted in, in effect, double payments
being made to this set of people. We telephoned the ones that
were the highest overpayments and we wrote to the others to alert
them, so they all know about it.
Q12 Chairman: Can I stop you there.
My personal view is that we should know as well, the public should
know, and I would ask you to provide us with a note of what these
businesses are that are receiving these overpayments and have
been sitting on this money for so long.[4]
Mr Cooper: That information is
available.
Q13 Chairman: I think we should know
what is going on.
Mrs Ghosh: Certainly.
Q14 Chairman: Let us move on from
overpayments now. We know that apparently at the moment 61% of
farmers are satisfied. That still leaves a considerable proportion
that are not. How do you intend to increase the farmers' satisfaction
with your outfit? It may of course have been altered by the lowering
of expectations that you have even achieved 61%. It is not necessarily
a good figure.
Mr Cooper: I recognise that we
are starting from a low base. We had a number of difficulties,
as you are very familiar with. The arrangements that we are putting
in place, we declared the intention to provide a case worker for
every claimant that we deal with, and we have done that. What
we have not done is actually supported the processors with the
tools they need to be able to provide the sort of service that
we would like to provide. There are two things that I think really
wind farmers up. One is the timing of payment and the other is
our ability to give them answers to their questions. On the timing
of payment, we are clearly getting better at that and payments
are flowing now for this year. On answering their questions, then
I would accept that we are not yet doing a good job at that. We
are training people, we are giving them the relevant experience
and providing them with better tools that they will need, but
there are still shortcomings and there are still things we need
to do, and I think recovering the sort of service that we need
to give farmers and improving that is going to take a period of
time; it is not going to happen overnight.
Q15 Chairman: We know, Mr Cooper,
that your recovery plan is going to cost us £40 million.
That is what is already estimated. Can you give us a reassurance
that it will not cost more than that? This is the recovery plan
of £40 million mentioned in paragraph 4.6, on top of the
£250 million that you have already spent.
Mr Cooper: The £40 million
is an additional investment to improve the way we work, the case
workers' arrangements, and also to upgrade the IT solution, to
modify it to make it support case workers as opposed to task-based
working. Significant investment has already been made out of that
£40 million and some of the benefits are starting to come
through now.
Q16 Chairman: This is all very interesting
but I did not actually ask that question. I wanted a reassurance
from you that we are not going to be asked to spend any more than
the £40 million.
Mr Cooper: We have no plans. The
£40 million is spread over three years.
Q17 Chairman: Of course this is on
top of the £250 million?
Mr Cooper: Yes.
Q18 Chairman: I think that this is
an extraordinary state of affairs. You have handed out £300
million,[5]
if my calculations are right, to just 120,000 farmers. That is
just £2,500 per farmer. You have 4,000 people in this agency,
and from paragraph 3.8 we know that 2,000 are just doing this
work and no other, so 2,000 full-time officials are handing out
£2,500 to 120,000 people. It is staggering non-value for
money, is it not? It would have been a lot better if you had paid
each farmer £3,000 or £4,000 and just got on with it,
frankly, would it not.
Mrs Ghosh: You quote in the Report
the question of the value for money of the current arrangements,
and I think Tony and I would completely agree that although the
value for money is getting much better, there is more value for
money to be achieved.
Q19 Chairman: You can say that again.
Mrs Ghosh: If Tony represents
the demand side in terms of investment and improvement, I represent
the supply side. We are not planning in our CSR07 spend to spend
any more than the money we have already given him and there are
a number of other priorities. The greatest reassurance we can
take, as Tony said, is that the system is now working and we are
now at the stage of having paid 80,000 of our 106,000 applicants.
We have already paid them this year, which shows how far the system
has improved. I am in danger of using a technical phrase but we
will also be able to give them "definitive entitlements"
and therefore we will have worked to clear out the problems with
old data. Tony said we started from a low base. We are at a much
higher base now and we can really work to drive through the value
for money, including for example things like e-channels which
again will get far more value for money out of the system.
1 Ev 16 Back
2
Note by witness: Further work has identified that some 70%, rather
than 80%, of overpayments are for less than £1,000. Back
3
Note by witness: In practice, there would not have been two payments,
but a single one for roughly double the amount that was properly
due. Back
4
Ev 16 Back
5
Note by witness: We are unclear how the £300 million figure
has been arrived at. Net annual payments in England under the
SPS total in the region of £1.5 billion. Back
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