Examination of Witnesses (Questions 40-59)
DEFRA AND RURAL
PAYMENTS AGENCY
23 JANUARY 2008
Q40 Geraldine Smith: One of the problems
you can have is farmers at market where whoever has got the money
is king and they can buy the animals, and the people who are still
waiting for their payment may be in dire straits with cash flow
problems so they may have to sell their animals cheaply, so it
makes a huge difference that there is some equality here.
Mrs Ghosh: Indeed, and what we
need to get into here is a regular and predictable flow. The people
who have now had their payments this year have had them, on the
whole, less than 12 months after they received their payment last
year. We were obviously later than we would have wished last year,
so in cash flow terms they have benefited. What we need to do
is to get to a stage where we have a regular 12-month process
so that it is predictable. Did you want to say something about
the order in which we pay?
Mr Cooper: Only to say that we
take much longer to process a complex, high-value claim. It does
take a number of months to process that claim. We actually start
work on all claims but we do give priority to some. Obviously
if it is a stress case we have to give priority to that, but we
also give priority—or we have done this year—to SPS
claims that have a link to Hill Farm Allowance, on the basis that
they cannot be paid Hill Farm Allowance until we have cleared
the SPS claim. We have also tried to address things like on commons
because again we know where the bottlenecks are now, and by clearing
that sort of work we can then unblock other payments that are
due to people.
Q41 Geraldine Smith: If I rang your
office, would you be able to tell me approximately when a constituent
will be paid and how long it would take?
Mr Cooper: At this stage we would
now be able to tell how much work is outstanding and the nature
of the work that is outstanding.
Q42 Geraldine Smith: Would you be
able to say for example, "Oh, that will be paid in the middle
of February," or, "That will be paid by ... "
Mr Cooper: When Mrs Ghosh describes
the ability for the Agency to be more predictable in its performance,
then I would be very cautious about giving a date.
Q43 Geraldine Smith: Can you not
appreciate the problems that that causes to farmers then because
cash flow is so important to them? If even an MP rings up and
is told, "We really do not know when that claim is going
to be processed", I do not think that is good enough.
Mrs Ghosh: That is one of the
elements of the recovery plan and some of the IT investment we
are putting in. As Tony said at the beginning, they do not yet
have but they are rapidly developing the tools to provide that
kind of customer service so they can see the end-to-end case,
and that is one of the forthcoming IT changes.
Q44 Geraldine Smith: When can our
farmers expect the same quality of service that people get in
Wales, in Scotland, in Germany? When can they expect that standard
of service?
Mr Cooper: We would hope that
in the scheme year of 2008 that we will deliver a service where
we can be much more confident about the timing of payments and
much more confident about the ability to express if there is work
outstanding what is the work that needs to be done.
Q45 Geraldine Smith: Going back to
the complexity of the scheme, that seems to have been a major
problem, do you feel that you have got to grips with that? Do
you feel that farmers know if they have been overpaid, because
the scheme is so complex to start with?
Mr Cooper: The experience I have
had is that farmers do tend to know how much they should expect
and they are pretty quick to tell us when we have got it wrong.
We need to speed up the process of making sure that that payment
is then corrected.
Q46 Geraldine Smith: What sort of
arrangements do you make to deal with hardship? If someone has
received an overpayment and they think they have got more money
than they have, they spend it.
Mrs Ghosh: Yes, and indeed we
can be flexible, although we have to keep within the European
rules and clearly we need to make sure, particularly with NAO
colleagues sitting here, that we protect the funds. We have to
make reasonable efforts to get overpayments reclaimed but we have
a variety of different ways of doing it. We can offer people to
be netted off their next year's payment, we can offer repayment
over periods of time, or one-off cheques, and we take into account
things like harvest times and the more sensitive customers such
as people receiving the Hill Farm Allowance. We have got a good
range of discretions which we can use. We can just write off very
small overpayments for example.
Q47 Geraldine Smith: Mr Cooper, what
other things can you do to restore confidence within the farming
community? It really has been so severely dented with what has
taken place in the past.
Mr Cooper: I think achieving payments
in a shorter time-frame than we have been able to do in the past
is going to restore confidence, and providing information to them
that is accurate, and on the telephone being able to answer their
questions, is the sort of thing that is going to restore their
confidence.
Geraldine Smith: I sincerely hope you
do that.
Q48 Mr Dunne: Mrs Ghosh, you were
appointed to your present role in November 2005.
Mrs Ghosh: Yes.
Q49 Mr Dunne: And Mr Cooper bravely
took up the poisoned chalice of his role in May 2006. I see from
the introduction to the agenda for this session that Mr Cooper
is still described as the "Interim" Chief Executive.
Could you explain why that is and when you are intending to put
the poor man out of his misery and give him a proper job?
Mrs Ghosh: I hasten to add he
is receiving a proper salary! This is to do with the arcane rules
about Civil Service appointments. At the time when Johnson McNeil
left the organisation, as you know, Mark Addison stepped in and
did a lot of the groundwork on which Tony then built. I was extremely
keen to get the recovery programme going quickly and to appoint
someone who had very good operational experience, so rather than
go through the whole process that is required under Civil Service
Commissioners' rules, I had informal discussion with colleagues
across Whitehall and we identified Tony. It is only because he
has not gone through a formal and open competition that I cannot
call him the Chief Executive because the Civil Service rules do
not allow it. We are going to be launching a proper competition
in a month's time or so and I very much hope that Tony will apply,
but that is obviously for him to decide.
Q50 Mr Dunne: Should you not have
considered doing that a little earlier? It will be some two years
that he has been in this limbo, and you are not starting a proper
process for another month.
Mrs Ghosh: I have to say he has
not behaved like a man who is in limbo, and I think the improvements
he has brought about in the Agency show that he has been entirely
committed to success. I think it is a technicality rather than
in any way having affected the substance.
Mr Dunne: Mr Cooper, we see from the
Report at paragraph 2.4 that you have completed all bar 24 outstanding
claims for 2005, and those were all held up by probate and the
equivalent. I am pleased to say that the final payment to a farmer
in my constituency was made, I believe, in November last year.
I should just remind the Committee, Chairman, that I am a recipient
of Single Payment and that would be declared in the Register of
Interests.
Mr Bacon: Well, it would be if they had
paid it!
Q51 Mr Dunne: In paragraph 3.3 it
refers to 115 farmers who have still received no payment from
the 2006 year. Could you please update us with where you are,
both on the 2005 and 2006 cases?
Mr Cooper: For 2005, there are
still nine cases that have not been paid, with a total value of
the order of £70,000. Eight of those are in probate and there
is one that has a legal issue which we are working through. The
eight in probate obviously have to wait until we can include those
cases. For 2006, we now have 76 cases that have yet to be paid.
There are 53 in probate and we are working through the balance,
with a total value of about £300,000. We have ten of those
cases that are ready for payment which will be made in the next
couple of weeks.
Q52 Mr Dunne: Thank you. In answer
to Geraldine Smith's questions, I think you indicated in relation
to 2007 that you currently expect to pay 75% by March 2008 and
90% by May 2008. Did you indicate to the farming community that
you would be making payments from as early as January 2008? Have
you made any such payments yet for 2007?
Mr Cooper: We have made those
payments. The targets we have are published and obviously we try
and do better than those targets. Thus far we have made payments;
we have paid in value just under 60% of the fund's value.
Q53 Mr Dunne: In terms of numbers
of farms, do you have a percentage for that so far?
Mrs Ghosh: It is the 80,000 figure
that I mentioned. 80,000 claimants have already received their
payment.
Q54 Mr Dunne: For 2007?
Mrs Ghosh: For 2007.
Q55 Mr Dunne: What is your target
for 2008 and your work planning in terms of getting payments made,
because it seems that it has taken you three years to get to a
position, which remains worse, in terms of the payment cycle,
than when you started this whole process? I well remember that
it was expected under the old system that everybody would be paid
within the year, ie before the end of December in the year for
which payments were made, and you require information I think
by May in order to make payments. It seems quite inexplicable
that it could still be taking more than six months to process
these claims.
Mr Cooper: We have to achieve
this year's target first of course, but the next stage will be
to agree targets, and we do not agree them until late February.
The process of agreeing them requires us to make our estimate
of what is going to be possible. We will be in a better position
than this year so we would expect to see further improvements,
and our endeavour will always be to pay as quickly as possible.
Q56 Mr Dunne: You have to agree it
with whom?
Mr Cooper: We have to agree targets
formally with ministers before they are published in the April
business plan.
Q57 Mr Dunne: Are ministers not setting
you a target of seeking to get payment within the year?
Mr Cooper: The approach that we
take is to offer first of all what we believe is achievable, based
on some evidence of productivity, of our capability, and other
aspects of work that have to be completed.
Q58 Mr Dunne: Is it an unreasonable
expectation for you to get your organisation sufficiently efficient
to be able to pay within a year, as many other countries, as we
have heard are doing already?
Mrs Ghosh: If I can come in, Tony.
Ministers have consistently taken the view that they need to give
coherent, consistent and reliable messages to the farming community
as customers. I think what they have done consistently is announced
to Parliament what they regard as realistic and achievable targets
for payment dates, because setting unrealistic targets which we
then fail to meet, in terms of the impact on small businesses,
would be far more damaging. Every year they have set Tony a more
challenging target and when we have looked at 2007 performance
my policy team, working with Tony, will make recommendations on
how far that could be further improved for 2008. Obviously, again,
they have to consider value-for-money issues in terms of how much
better performance we can afford in terms of the overall budget
of the Department.
Q59 Mr Dunne: I urge you to look
at setting a target for December 2008 for payment for 2008. You
raise value for money and that takes me on to paragraph 3.9 where
it says the Hunter review estimates that the average cost for
processing the 2005 claims was £750. Does it strike you as
acceptable that some 42,000 claims were for less than the cost
of the administration of the claim for that year, roughly 36%
of all claimants?
Mrs Ghosh: I will ask Tony to
talk about the value-for-money point. As I said earlier, of course
we are trying to improve value for money. Nonetheless, we do have
to operate within a scheme which gives entitlements, and obviously
this is an issue that may arise in the CAP health check later
this year, down to very small amounts of money. I would have thought
it is almost impossible for some of those payments to be made
at less than the cost of administration. I think there will always
be cases where it costs us more to pay the money to the claimant
than the amount of the Single Payment that they get. Nonetheless,
we are trying to drive it down.
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