Examination of Witnesses (Questions 20-39)
DEFRA AND RURAL
PAYMENTS AGENCY
23 JANUARY 2008
Q20 Chairman: Sorry, but none of
that negates what I am putting to you, that you employ 2,000 full-time
people to hand out to just 120,000 people £2,500. One of
the reasons why you got into this appalling mess is that you made
the scheme much more complicated than other countries. Have you
learned about what other countries have done? I think Finland
is mentioned in this Report. We can read about Finland and Germany
in paragraph 3.4 and I specifically asked the NAO in a follow-up
question to look at benchmarking across Europe. It says: "However
in Germany and Finland, the dynamic element will not be achieved
until 2010 and 2011 respectively." You could have had a much
simpler system.
Mrs Ghosh: Indeed, and we discussed
with the Committee when we came in October of the year before
last why ministers took the decision that they took then to move
straight to the dynamic hybrid system and the fact, indeed, that
had they known the challenges in the Agency they might well not
have done so. The comparator there with Finland and Germany is
effectively at the moment with countries operating a static hybrid
scheme. We have clearly got a long way to go to catch up with
them, but I hope that evidence we have got of the improvement
in payment rate and accuracy shows that we have invested in the
right way and that we are going in the right direction.
Q21 Chairman: Mr Cooper, we were
astonished that your predecessor seemed to have very little contact
with the Permanent Secretary and virtually no contact with the
Secretary of State so, Mrs Ghosh, are you meeting Mr Cooper?
Mrs Ghosh: As you know from the
Report, we have set up a different and much more streamlined governance
arrangement. Mr Cooper reports directly to the Director General
of the Food and Farming Group, who obviously reports to me. The
Director General of the Food and Farming Group chairs the Oversight
Committee for the Agency, which again gets a very positive write-up
in the NAO Report. Tony and I have regular catch-up meetings.
Until last summer I was having monthly or six-weekly meetings
with the European Head of Accenture to make sure the IT was being
provided appropriately, and Tony very regularly meets both with
Jeff Rooker and with Hilary Benn, so I think the visibility of
the Chief Executive and a much clearer governance arrangement
is proving its worth.
Chairman: Thank you. David Curry?
Q22 Mr Curry: Mrs Ghosh, you have
just said something really quite interesting. You said that had
the Minister at the time known the challenge—
Mrs Ghosh: --- Had she known,
yes.
Q23 Mr Curry: --- which implementing
a very complex scheme in year one would have posed, she might
not have done it. You make it sound as if it is entirely reasonable
that the Minister would not know of the situation in the Agency
which is charged with delivering the policy. That is rather extraordinary,
is it not? She should have known and if she did not she was incompetent
and took silly decisions.
Mrs Ghosh: The findings of the
NAO's last Report, and indeed at the hearing, reached the conclusion
that the Agency had not itself recognised the problems that they
were facing. As you know, until the very last minute, indeed once
payments had started to be made, they believed they would be able
to achieve the deadlines that ministers had set. I think the lessons
that this Committee and the NAO set out in their earlier Reports
demonstrated that the capacity of the organisation to advise ministers—and
I think we put them right—and indeed the connection between
the policy and operations in the Department meant that ministers
were being told it was possible when it was not in fact possible.
The point I am making is that had ministers at the time been told
it was effectively impossible—and I think it is very difficult
to discuss counter-factuals—they may have made a different
decision, had they known the difficulty.
Q24 Mr Curry: Right. Are you an aficionado
of the Oxford Farming Conference?
Mrs Ghosh: I did not go this year
but I have been for the last two years.
Q25 Mr Curry: I ask you the question,
and this might sound slightly curious, because over the last few
weeks when I have met senior people from the agricultural industry—Oxford
is far too grand for me so I very rarely go—they report
musings which they attribute to you: "Is there any point
at all in supporting a British livestock industry?" They
do not say this as if it is some irony or joke. Knowing the state
of the industry and some of the difficulties it has been through,
they actually do think that the Government has more or less confirmed
it would be a good idea to wind it down. This is a very good occasion
for you to be able to dispel any illusion they may have.
Mrs Ghosh: I absolutely deny that.
Q26 Mr Curry: But you are clearly
familiar with it?
Mrs Ghosh: I am entirely familiar
with it and I was completely and utterly baffled by it. I could
not think where the idea had come from. It certainly had not come
from me. The answer I gave at the time, and I would give to the
Committee, is if the farming community believes that Defra does
not support farming as an industry, I think it simply has to look
at our record: the amount of people we have within the core department
and in our agencies working with and alongside the farming community;
the amount of money we put into research; the commitment we have
made to follow up Don Curry; the work over the years, for example,
on getting British beef back in the European market following
BSE, hundreds and hundreds of millions of pounds, hours and hours
of negotiating in Europe. Many of my best brains work on the food
and farming side. I think it is one of those cases where it may
be that some members of the farming community are out of sympathy
with the policies of the Government in areas of farming. I think
the idea that Defra is not committed to the success of the farming
industry is mad.
Q27 Mr Curry: Well, I am delighted
that you have had the opportunity to state that.
Mrs Ghosh: I am delighted too.
Q28 Mr Curry: I think your analysis
of the reasons may be accurate as well, if I may say so, particularly
when it comes to things like NVZs. Mr Cooper, there are a couple
of things for you. I am sorry they are both slightly technical
but they are very important. I do not expect you to answer this
now but I would like you to collect the information and give me
a substantive answer. It is to do with the treatment of people
who farm on common land. There is a real problem here. There are
thousands of acres which are subject to historic grazing rights.
The problem is that the methodology that you have for allocating
entitlement to tenant farmers is causing huge consternation and
appears to be ignoring established practice under the old IACS
system. Let me illustrate what I mean. In my constituency I have
the Chatsworth estate, and what happened there was that the agents
for the Duke of Devonshire confirmed the grazing rights he had
agreed with the tenants to the Government Office. The tenants
themselves are now being required to notify them and the RPA is
refusing to recognise these rights and will not accept confirmation
by the agents of the Chatsworth estate. That means that some tenants
now find themselves entirely denied the right to the Single Farm
Payment despite the fact they have enjoyed the right historically.
Secondly, it has always been historical practice on the moor to
remove sheep for periods of the year for environmental purposes
and for management—lambing and tupping for example. This
was recognised previously. The RPA has now decided that there
should be no entitlement unless the sheep are on the moors for
a continuous 10-month period. Not only does this deny sensible
environmental and management practices but the Government's own
environmental stewardship schemes require sheep to be removed
off the moor. Finally, the RPA is applying a ratio between cattle
and sheep to calculate livestock units which is entirely different
to the ratio used in the 1965 Commons Registration Act, which
is the basis for management of the uplands. We do need to sort
some sensible pragmatic way out of this, do we not?
Mr Cooper: We do.
Q29 Mr Curry: I would be very happy,
if you could assemble your experts, I will bring just one, and
let us try and thrash it out. I have tried to talk to the Minister
but I think the Minister is so surprised at being reappointed
that he has not really recovered from the shock! We do need to
sort this one out; can we do so?
Mr Cooper: I would be very happy
to meet and have that discussion. It has already been raised with
me.
Q30 Chairman: No, I do not want meetings
and all the rest of it. This is formal evidence so you either
give the answer now or you give a formal note.
Mr Cooper: If I could respond
formally.[6]
Mr Curry: I am sure the Chairman would
love to have a formal note.
Chairman: You can have a meeting as well.
Q31 Mr Curry: That would be a very
good basis on which to have a meeting. Can I ask you another question,
Mr Cooper, and this is about the way you deal with farmers. I
am sorry to bring individual cases but individual cases are sometimes
emblematic of what is happening. There is a farmer in my constituency
called Mr Tennant and he appealed. He had an appeal because you
accepted that it was under the "obvious error" provisions.
The appeal was accepted and he was delighted; he thought it was
very reasonable. Two months later, without any explanation, the
agent got a phone call to say the appeal had been reversed. No
explanation, no documents, absolutely nothing, and there has been
no progress in trying to get any explanation for it. This is not
reasonable. When there is a formal appeal procedure, and a man
has been through the appeal procedure and the appeal procedure
has found him right; that has got to stand. He cannot expect a
phone call two months later saying, "Sorry chaps, we got
it wrong." I am prepared to give you the details and I am
sure the Chairman would love it as an illustration for the record.
Mr Cooper: If I can respond because
I am aware of the situation. I am extremely disappointed that
it reached the stage one appeal. When it reaches that stage it
is normally considered very, very carefully and a conclusion is
drawn, and I was surprised when I learned that the decision had
been reversed. In principle, though, you would expect us to change
a decision if we find that we have made an error in that judgment
on the decision. Sometimes it benefits farmers; sometimes it does
not.
Q32 Mr Curry: But you would not expect
an interval of two months?
Mr Cooper: I would not and I certainly
would not normally expect it of the very experienced people that
I have working on the appeals.
Q33 Mr Curry: We will pursue that.
Can I ask finally, because I suspect the Chairman is about to
send one of his billet-doux around, last year now, as you
know we had a couple of circumstances of foot and mouth disease
and Bluetongue. I am not yet aware that those may have an impact
upon the ability of farmers to fulfil the requirements to be eligible
for payments. Could we have your assurance that even though this
was limited (although we have a horrible feeling that Bluetongue
is going to be around) that you will be able to respond sympathetically
and in an informed way where farmers through no fault of their
own have not been able to meet conditions which they would normally
meet simply because of restrictions imposed by Bluetongue and
foot and mouth disease.
Mr Cooper: Believe it or not,
we try and interpret all the regulations as sympathetically as
possible.
Q34 Mr Curry: I represent North Yorkshire,
and foot and mouth disease was in Surrey and Bluetongue was in
Suffolk, if I remember rightly, and yet agricultural activity
in North Yorkshire was virtually brought to a halt, predominantly
because of a Bluetongue zone which meant that you could not have
all the normal movements from upland to lowland, which effectively
ground to a halt.
Mrs Ghosh: As Members will know,
ministers have been extremely sympathetic in terms of arranging
for the impact of floods and indeed the impact of animal disease.
We have to operate within European rules so there comes a point
where we cannot be as flexible as we might want to be. As Tony
says, we try to interpret the rules flexibly.
Q35 Geraldine Smith: Speaking of
European rules, do they allow in exceptional circumstances for
Single Farm Payments to be made earlier? I understand that on
19 October there were European countries that were eligible to
access payments because of exceptional circumstances.
Mr Cooper: There was a provision
to make advanced payments in that period. I think only two Member
States took advantage of that. We were not in a position to do
that, we had not validated the claims, and it is a requirement
that you take a claim to a certain point in validation before
making the advance payment.
Q36 Geraldine Smith: Because we certainly
did have exceptional circumstances: we had foot and mouth, Bluetongue
and flooding over the summer, so I think farmers in a lot of areas
were in dire straits and would have appreciated being able to
access that money earlier. Who was responsible for that failure
then because of the claims?
Mrs Ghosh: Can I dip in. I do
not think there was any failure. As the Report I think makes very
clear, we are now beginning to start payments (although the 2008
Scheme will be better a regular cycle of application by the farmers;
checks and validation by the Agency; and payments) and clearly
we started making payments this year in December, and we are well
advanced now. We will be looking next year to get (I hope) to
a stable position so that farmers will have year-on-year predictability.
It was not a failure; it was just not something that was built
into the cycle of checks that we had established, as Tony says.
We would have lost a great deal of taxpayers' money, probably
more than we were paying out in terms of risk to the fund, if
we had started making payments in the October. There is no failure;
it just was not something that was predicted in the cycle of work
that the Agency was doing. Of course the Government did make a
payment of £12.5 million very successfully through the Agency
to hill farmers specifically to help meet some of the impact of
foot and mouth and also made special arrangements to people in
the most stressed areas in terms of movements of fallen stock;
so we did things.
Q37 Geraldine Smith: Mr Cooper, I
think you have had a positive influence and things are beginning
to move now, so I appreciate that, but farmers are very sceptical
and they need their confidence restored. They have been through
some horrendous stories with the Single Payment. Are you confident
that you are sure you know where all the overpayments are now?
Mr Cooper: I am on an individual
claim basis. I am not when I am trying to roll it up to an overall
figure to give to the Committee. We have to send out entitlement
statements as part of the payments of 2007 and we have sent out
63,000 of those and we have had very, very little comeback in
terms of people saying, "You have still got it wrong,"
so that, again, gives me a degree of confidence. We have spent
a huge amount of time and effort and resources in making sure
that the entitlements are correct, and that is the basis on which
the payments are made. We are almost at a point where we have
caught up on what happened in 2005 and 2006, and therefore I am
much more confident that what we are paying is accurate and that
we are in a position now to move forward with improvements and
attend to the shortcomings of the service that we give.
Q38 Geraldine Smith: What percentage
of payments have been made already? I think you did mention that.
Mrs Ghosh: We have paid to 80,000
claimants, which is out of 106,000, so slightly less than 80%
of claimants have received their payment. It is about 60% of the
fund because obviously if some of the larger payments are yet
to go out—and they often are later to go out because they
are more complicated—the two percentages are not entirely
accurate.[7]
Q39 Geraldine Smith: I know of some farmers
in my constituency that have received the payment. Can I be confident
that all farmers in the constituency will have received it? Do
you work by regions or areas?
Mrs Ghosh: I will hand over to
Tony but we work by types of payment. Clearly we focus on—and
this was discussed by the Committee before—not the smallest
payments but the middle-sized payments, in the sense the people
who need the money most in terms of their cash flow. It does not
necessarily mean that everybody in a single region will have got
payments. The target we have set Tony, and we have said publicly,
is to have all payments by the end of March.
Mr Cooper: It is to have paid
75% by March and 90% by the end of May.
Mrs Ghosh: Thank you, sorry.
6 Ev 17 Back
7
Note by witness: Latest figures as at 11 February show that 88,967
claimants (83.4%) under the 2007 SPS had received some £1.026
billion (70.8%) Back
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