Defra departmental Annual Report and Estimates - Environment, Food and Rural Affairs Committee Contents


Response to EFRA questions on the Defra Department Report 2009

SEPTEMBER 2009

PSA 28 (PAGE 149 OF THE DEPARTMENTAL REPORT)

1.   Indicator 28.2 (farmland birds)

Page 149 of the Departmental Report states that this indicator has not yet been assessed in the CSR period, although most recently available data for the 2007 breeding season show that there had been a small decrease in the wild breeding bird index. What are the Department's plans for addressing the decline of the farmland birds indicator? What is the Department's assessment of the way particular farming practices and Defra policies may have contributed to that decline?

Potential Reasons for the decline and summary assessment of Defra's role

  Farmland bird populations declined by around 50% between the mid-1970s and the mid-1990s due to agricultural intensification. This included the loss of mixed farming, the switch from spring to autumn sowing of cereal crops (and consequent loss of overwinter stubble fields), increased use of agro-chemicals (particularly the indirect effect of pesticides), agricultural improvement of grasslands and the loss of field margins and hedges. These changes have meant that farmland birds have fewer places to nest, are less successful when they do nest and are less likely to survive the winter.

  Ornithological experts are unable to identify with any certainty the main additional drivers behind recent declines, with the exception of a possible disease affecting Greenfinch populations. The Department considers it likely that there may have been a steeper decline in the farmland bird index had we not put in place mitigating measures such as Environmental Stewardship (ES).

Defra's policies

  Agri-environment schemes—ES and the now closed schemes Countryside Stewardship (CSS) and Environmentally Sensitive Areas (ESA)—form the major delivery mechanism for increases in farmland bird populations. Currently 50,000 farmers are under agreement with over 6m ha (over 65% of available farmland). We have changed several aspects of ES, in response to the recent Review of Progress (published in 2008), by including new options, changing existing options and improving uptake of key options, targeting and advice[3]. These should further improve ES's performance for farmland birds. Implementation of these changes has begun and initial prescription and option changes are already in place. The final tranche of Review of Progress changes will be in place (subject to Commission approval) in time for the Environmental Stewardship Entry Level Scheme (ELS) renewals exercise from August 2010 onwards.

  In addition to the agri-environment schemes we work closely with our delivery body Natural England (NE) and with other stakeholders on other projects including:

  Regional farmland bird initiatives

  NE, in partnership with others, such as RSPB and the Farming and Wildlife Advisory Group (FWAG), is developing a number of regional farmland bird initiatives to increase uptake of the valuable in-field options that benefit farmland birds via ES.

  Farmers and land managers applying for ES will receive tailored advice delivered through workshops and one-to-one farm visits to support the needs of these farmland bird species. Farmers have responded enthusiastically to these initiatives.

  Enhanced training and information for farmers

  The Department, with NE, is developing the Entry Level Stewardship Training and Information Programme (ETIP). ETIP will help farmers in all regions of England to put in place the right package of management options for their land, including those for farmland bird species.

  The Campaign for the Farmed Environment

  The Campaign for the Farmed Environment is a farming industry-led voluntary approach to recapture the environmental benefits of set-aside that the Government has agreed with the National Farmers Union, the Country Land and Business Association, and other partners including RSPB, FWAG and the Game and Wildlife Conservation Trust. The Campaign will encourage the uptake of the most valuable options within ES and under the Campaign, by June 2012, farmers will;

    — double the uptake of these key ELS in-field options, covering 40,000 hectares on top of current levels;

    — increase uncropped land by 20,000 hectares from January 2008 levels. The Campaign will also seek to improve the environmental management of at least 60,000 hectares of uncropped land; and

    — introduce voluntary measures of benefit to the environment on other land covering from at least 30,000 to 50,000 hectares.

Path to recovery from the decline in the index

  Based on our current knowledge and plans there is a reasonable likelihood that the target will be back on course in three to five years' time. This will be dependent on: continued high uptake of ES among farmers and land managers (aided by enhanced training and an information package on options and coverage of ES and changes to it), the successful implementation of ES changes and better targeting of Stewardship agreements, and the effectiveness of measures to mitigate the loss of set-aside through the Campaign for the Farmed Environment. Where appropriate measures have been put in place through ES, farmland bird populations have responded positively. An example of this is at the RSPB's Hope Farm in Cambridgeshire where farmland bird numbers have doubled since 2000, mainly due to land management undertaken through ELS. This indicates that improved use of existing measures through scheme targeting, advice, and correct location of scheme options, can deliver a recovery for farmland birds (as already demonstrated with the Stone Curlew and Cirl Bunting in the predecessor Countryside Stewardship Scheme).

  Additionally we have a continuing programme of scheme evaluation and Research & Development to help refine existing measures further and recommend new scheme options as necessary. We believe this will help us get back on course to meet the target by 2020.

2.   Indicator 28.4 (marine health)

The Delivery Agreement for PSA 28 notes that this indicator would be assessed by, amongst other things, the "plankton status". Page 150 of the Departmental Report states that indicator 28.4 has not yet been assessed, but that 2007 data indicates that plankton have declined, "largely due to climate change impacts". What measures are available to the Department, specifically, to address the apparent deterioration in plankton status?

  Defra's scientific knowledge is limited about the extent to which anthropogenic climate change is driving the apparent changes in zooplankton. However, the changes in zooplankton affect a large area of the North Atlantic and do appear to be linked to changes in climate and, in particular, changes in the North Atlantic Oscillation, which is the key control in the climate of the North Atlantic Ocean. Nevertheless Defra's science programme aims to improve our understanding of the implications of climate change and ocean acidification in the marine ecosystem, including for fish productivity, which will allow the development of potential adaptation strategies.

  The Government is actively pursuing policies to mitigate the effects of climate change, which also aim to halt and reverse such impacts on our oceans. However measures of the scale needed specifically to reverse the changes reflected in the plankton indicator (independent of climate change mitigation) are either not available or are not likely to be feasible. Even if such measures were available the full impacts of such interventions, both positive and negative, are unclear.

3.   Departmental Strategic Objectives (DSOs)

There have been a number of changes made to the DSOs since they were last described in the Autumn Performance Review—four DSOs have had their wording changed, at least two DSOs appear to have fewer indicators, and the Department has created an entirely new DSO (DSO 7). The Committee would like details of all of the changes to DSOs and their underlying indicators since the 2008 Autumn performance Report was published, along with the rationale for each of the changes.

  Details of changes to, and the rationale for, Defra's DSOs and their underlying indicators are detailed below.

  DSO 1: DSO 1 is a new DSO that puts emphasis on the importance of the domestic Adapting to Climate Change Programme. The lead on tackling climate change internationally has now passed to the Department of Energy and Climate Change (DECC) since its creation in October 2008.

  DSO 3: The title of DSO 3 has changed. In 2007-08 it was "Sustainable patterns of consumption and production", it now reads "Sustainable, low carbon and resource efficient patterns of consumption and production". The change was to draw out specifically that the work of Sustainable Consumption and Production (SCP) has a major role in minimising carbon emissions, waste and the use of non-renewable resource. One indicator underpinning DSO 3 has also changed. It was "Better products, as measured by annual reductions in CO2 emissions from domestic appliances". It has now been changed to "Better products, as measured by progress towards meeting the Energy White Paper target for annual reductions in CO2 emissions from product use". This change was made to bring the indicator more closely into line with the work that is underway to help meet the Energy White Paper target.

  DSO 4: The title of DSO 4 has changed and one intermediate outcome and one indicator removed since the APR. This is because responsibility for radioactive waste management has transferred from Defra to DECC. This resulted in the loss of one indicator. Following the creation of DECC, Defra also revised its DSOs. As part of this, the monitoring of climate change adaptation shifted from DSO 4 (where it was an Intermediate Outcome) to become the new DSO 1.

  DSO 6: There is one less indicator underpinning DSO 6 than in the APR. This was the indicator relating to food production and consumption, which now underpins DSO 7, our new food DSO.

  DSO 7: The machinery of Government changes in October 2008 gave Defra a coordinating role in food policy and in line with this the new DSO 7 was created. Previously food related work was brigaded under the DSO 6 "A thriving farming and food sector". The new role requires us to work with other Departments on wider issues, such as social impacts (health and wellbeing, food inequalities, food poverty, food skills) and international activity on global food security and sustainability.

  DSO 8: The EFRA Committee in its 11th Report of Session 2007-08 (volume 1) recommended that Defra adopt the term "Socially and Economically Sustainable Rural Communities" for its DSO 8 to replace "Strong Rural Communities". In our response to the report, we agreed that the suggested change was a constructive one and accepted the recommendation.

4.   DSO 1: Climate Change (Departmental Report page 151)

The Report states that the Department plans in Autumn 2009 to propose a basket of indicators for the Adapting to Climate Change Programme for consultation. What is the Department's latest thinking on the sort of measures that might be involved, and to what extent does the Department expect such measures to include factors which the Department itself might be able to influence?

  Defra is developing this workstream with the intention of proposing a new basket of performance measures for adapting to climate change in Autumn 2009. These are likely to recognise the need to raise awareness, to build capacity in the public, private and third sectors, and to generate changes in policy and practice to deliver real world outcomes. Adaptation is essentially a process, rather than an outcome. Linking measures of adaptation success to outcomes is therefore a complex undertaking and is likely to require long timeframes for development. Furthermore, by aiming to "mainstream" adaptation into an organisation's common risk management processes, it will be difficult to distinguish the influence of "adaptation" risk management from other influences on decisions taken.

  A mixture of process and outcome indicators are likely to be in any proposals, with a particular emphasis on process indicators in the short term, but with an intention to shift to outcome indicators in the long term. Defra needs both to measure the UK's adaptive status, which includes elements outside of our control, such as private sector choices of adaptation actions, and to have indicators that measure the effectiveness of its programmes.

5.   DSO 2: Healthy Natural Environment (Departmental Report page 153)

On indicator 2.5.2, the Annual Report notes that a survey in 2007 found no overall change in average carbon concentration in soils since 1978. What is the Department's current thinking on the possible reasons for this lack of change?

  The lack of change in soil carbon as reported by the 2007 Countryside Survey is reassuring and suggests that soils have not been subject to the levels of degradation that were identified by a previous study in England and Wales. More recent large-scale soil surveys, such as National Soil Inventory Scotland, have also supported the Countryside Survey results. However, Defra recognises that there are weaknesses with the methodology of current soil surveys—at present they measure changes in the concentration of soil carbon only and do not taken into account losses due to erosion or oxidation of peat for example—and Defra is exploring ways to improve their robustness.

  Many factors can affect soil carbon concentrations including land management practices, weather variations, climate change impacts and nitrogen deposition, and research is ongoing to better understand how these factors may have contributed to the trends observed. At the same time, Defra has put in place measures to protect existing soil carbon through Common Agricultural Policy cross-compliance and Environmental Stewardship schemes and is looking at further opportunities to increase soil carbon stores. However, it will take potentially 7-10 years after implementation before the impact of these measures can be detected because levels of carbon in soils change very slowly.

6.   DSO 3: Sustainable Consumption and Production (Departmental Report page 155)

Four of the indicators for this DSO do not yet have baseline data available, although the narrative indicates that some data on "resource efficiency" and "consumption" might be available after June 2009 (indicators 3.1.1 and 3.2.2). The Committee would like to see this data when it is available.

  Please find below the data for indicators 3.1.1 and 3.1.2.

  Indicator 3.1.1: Resource efficiency, is measured by reductions in environmental impacts of manufacturing/services against Gross Value Added. Gross Value Added in the main sectors targeted by Sustainable Production and Consumption (SCP) policies rose by 25% between 2000 and 2007. Water use decreased by about 10% over the period, although because of climate variations it is too early to say whether the change is significant. CO2 emissions fell by 5%, while waste to landfill reduced from 27 mt to 21 mt.

DSO indicator 3.1.1: Resource Efficiency—data for the first year of the CSR period


  Data for 2007 the base year for the CSR period is as follows:

    1. Gross Value Added of SCP key sectors (UK): £864 billion in Chain Value Measures (2005 prices).

    2. Carbon dioxide emissions (UK): 182 mt.

    3. Water use (E&W): 2.7 million cubic metres.

    4. Commercial and industrial waste to landfill (England): 21.0 mt.

  Indicator 3.1.2: Household consumption is measured by reductions in environmental impacts of UK households against household spending. Household expenditure rose by 21% between 2000 and 2007. There was little change in water use with a small increase of 3%. CO2 emissions from energy fell 5%, while household waste not recycled fell from 27 mt to 20 mt, representing improvements.

DSO 3 Indicator 3.1.2: Household Consumption—data for the first year of the CSR period


  Data for 2007 (the base year for the CSR period) is as follows:

    1. Household final consumption expenditure (UK): £815 billion in Chain Value Measures (2005 prices, not seasonally adjusted).

    2. Carbon dioxide emissions from energy use in the home (UK): 141 mt.

    3. Water use (E&W): 2.9 million cubic metres.

    4. Household waste not recycled (UK): 20.3 mt.

  These data show that production is becoming more resource efficient over time, whilst although there was little change in water use in the home, changes in household energy use and household waste not recycled are heading in the right direction.

7.   DSO 8: Rural Communities (Departmental Report pp 169-171)

The two indicators for this DSO have, between them, 39 individual statistical measures. The Report states that the Department's performance will be assessed by comparing rural outcomes for these measures against the national average. The Committee would nevertheless like to see any trend data available for these measures, including if possible trend data that compares rural outcomes against national outcomes.

  The 39 statistical indicators used in the 2009 Departmental Report are supplemented by historical data for almost all of the indicators in DSO 8 The indicators have between two and 12 years' data in the "baseline" (pre 2008 data) which varies depending on whether the information has been collected or is readily available. The full report which contains tables and charts using this trend data is available on the Defra website.[4]

  This historical data is crucial in assessing the "traffic light" status of each indicator. The indicator is assessed not only on the relative position of rural areas to the national average for the most current year available but also on the trajectory from previous years and where this suggests the trend is heading in the future. Therefore, an indicator where performance in rural areas is the same as the national average but which is showing a downward trend for rural areas and an upward trend for England would be given an amber-red rating based on the trend rather than green rating based only on the current position of rural areas relative to the national average.

8.   DSO 9: Respected Department (Departmental Report page 172)

The Department has not defined any intermediate outcomes for this DSO. Instead, progress in delivering the policy outcomes for DSOs 1-8 will be tracked in combination with a range of internal management indicators for customer service, stakeholder perspectives, public opinion, staff engagement and efficiency. What data does the Department have on any of these themes, and what do they show? When does the Department expect that it will it be in a position to provide a progress assessment for this DSO?

  Defra's approach to DSO 9 is to monitor progress by a suite of internal management indicators. This reflects Defra's view that managing organisational respect in a Whitehall context is complex. What Defra is trying to measure is how internal organisation furthers the effort to achieve our policy outcomes. Although these measures are internally focussed our assessment is that Defra is respected and the DSO is being delivered. Given the internal value of these measures and the reality that they are at one step removed from what matters to the public there is little value in putting these and their RAG status into the public domain. Defra is happy to share these with EFRA, and a copy of the progress report for the period April to June 2009 is attached. Defra is now considering the case for removing this DSO, whilst continuing to monitor levels of respect by other parts of our corporate reporting process.

  Please see attached DSO 9 Progress Report.

EFFICIENCY

9.   CSR-07 Value for Money Target (Departmental Report pp 135-138)

 (i)   Defra plans to find £115 million of its required Value for Money savings by 2010-11 from "allocative savings", or "reprioritisations", including £75.6 million from such measures identified in 2008-09. What are the main areas or activities contributing to that £75.6 million saving? What "lower value activities" were given smaller budgets as a result?

  In setting the budget for 2008-09, Defra was entering the first year of a new Spending Review period, with a new set of challenges and priorities. The demand to spend money on the full portfolio of Defra's activities outstrips the budget available for the CSR-07 Settlement. Therefore Ministers and the Management Board had to undertake a "reprioritisation" exercise to make sure priorities were protected and sufficiently resourced. For example Ministers made public commitments to improve the speed and accuracy of Single Payment Scheme (SPS) payments to farmers and to increase government spending on flood risk management from £600 million in 2007-08 to £800 million in 2010-11.

  It was agreed that we could include £75.6 million of Allocative Savings within Defra's overall VfM savings in 2008-09 (in line with HMT and NAO guidance). This represents those areas where we made adjustments within a programme or ongoing activity to ensure that, within the overall budget available, higher priority activities received due recognition and support in the budget setting process. The table below provides a breakdown by Management Board Programme and by Group Programme/ongoing activity of where the £75.6 million was derived. However, it is worth emphasising that these figures represent adjustments made to components within the individual programmes listed. It does not therefore mean that the programme itself is a "lower value activity".


ProgrammeSavings 2008-09 (£k)


Board Programmes
Sustainable Production and Consumption 13,925
Rural Development Programme for England 9,800
Water Availability and Quality8,500
Marine3,500
Animal Health and Welfare3,000
Farming for the Future750
Waste250
Group Programmes and Ongoing Activities
Animal Health Agency8,750
People and Landscapes Programme6,000
Sustainable Development Programme4,500
Defra Strategy Programme3,550
Counterfactual Savings Programme Element1 900
Food Chain Programme500
Capital Savings
IT Infrastructure6,860
Delivery Body Asset Base3,565
Marine550
Core Defra Estate440
Counterfactual Savings Capital Element1 310
Total Allocative Savings75,650


Note 1: The "counterfactual" element represents the inflationary increase to the cost of the activities for which the savings have been made had the activities continued without the savings. This is the agreed HMT methodology for calculating VfM savings.


 (ii)   At page 137, the Defra Annual Report states that the NAO will review Value for Money savings and "report on each Department's claim during the CSR-07 spending period". When is the NAO's report on Defra's programme expected to be produced, and will such a report be made publicly available?

  Defra was one of three government departments that volunteered to become involved in a pilot study of VfM savings by the NAO in late 2008 and early 2009. This helped NAO to devise clear criteria for measuring VfM savings which they are now using to undertake VfM reviews of all government departments over the CSR-07 period. This can be found on their website.[5] Due to Defra's participation in the pilot study, and our relatively small level of savings compared to other departments, NAO do not expect to return to Defra for an audit review until the Summer 2010 at the earliest; as with all NAO VfM reports we would expect this to be published.

 (iii)   Defra's Value for Money target was increased by £75 million in Budget 2009. What savings measures does the Department expect to pursue to achieve the additional £75 million required?

  Defra has identified scope to deliver £75 million more efficiency savings. The savings will be mainly delivered by deploying opportunities identified in Defra's back office and IT functions, through collaborative procurement, better asset management and rationalisation of the Department's estates under the Operational Efficiency Programme (OEP). Initiatives include the following.

  Sustainable Workplace Management (SWM) brings much of the Defra network estate into a single Facilities Management contract realising economies of scale and increasing the flexibility and quality of Defra's facilities. The contract will save Defra £6 million each year from 2010-11 onwards and over its life time it will achieve sustainable savings of £126 million.

  Adopting a more risk-based approach to monitoring and enforcement and sharing costs with industry will save an additional £17 million on BSE and scrapie measures. The Animal Health Agency will save £7 million through modernised working practices supported by IT-enabled process change.

  Creation of the Food and Environment Research Agency (FERA) will reduce overhead costs by £2.5 million through the merger of the Central Science Laboratory, the Government Decontamination Service and Defra's Plant Health Service and Plant Variety Rights and Seeds Office.

  Defra's waste management and resource efficiency activities will be delivered through a single delivery channel, the Waste and Resources Action Programme (WRAP), saving £3 million.

  Further work is currently underway to validate and devise a delivery plan for the remaining £40 million VfM savings, building upon work already launched as part of the OEP programme.

10.   Operational Efficiency Programme

 (i)   The Committee would like detail of all programmes and expected savings under Defra's Operational Efficiency Programme banner.

  Defra's OEP can be outlined as follows. First a benchmarking phase this autumn, using HMT key performance indicators. Secondly functional reviews informed by the results of benchmarking and steers from Defra's respective Heads of Profession followed by implementation of review findings. Until the reviews are completed it is difficult to say what VfM savings will emerge under the OEP banner. However, we are aspiring to achieve 20% to 25% savings in our back office costs by 2013-14 compared to 2007-08. Defra is also aiming to improve procurement performance by collaborating much more than previously to secure greater VfM. Defra also plans to improve the value that we achieve via the management of our assets.

 (ii)   Page 40 of the Departmental Report notes that British Waterways will establish a wholly owned property subsidiary. Please can you provide details of any progress made in setting up the subsidiary? What savings are envisaged, and in what years?

  Discussions have been taking place between British Waterways (BW), Defra, HMT and the Shareholder Executive on setting up the property subsidiary. Progress will have been made and reported on in the Autumn Budget statement. The new structure will increase clarity of BW funding model and help ensure BW's continued focus on maximising returns from their property portfolio. More broadly Defra's OEP will look at the possibility of VfM savings from both asset management and efficiency, looking beyond the current CSR-07 period to 2013-14. BW will be part of this work as we endeavour to increase the VfM savings that we are making. Defra aims to complete the work by the end of 2009.

11.   Lyons Efficiency Target (Departmental Report page 138)

The Department states that the current overall forecast for the relocation of posts out of the South-East by March 2010 stands at 776 posts, which would significantly exceed the Department's original target. This includes 223 Agriculture and Horticulture Development Board posts relocated to Warwickshire and 140 posts for the Marine Management Organisation to be established in Tyneside. How many redundancies might be involved in these two moves, and what might the total extent of redundancy payments be?

  The Agriculture and Horticulture Development Board (AHDB) relocation to Stoneleigh was completed in July 2009. The following table shows the number of redundancies made as a result of relocation and the latest cost estimates.



Previous Organisation

Location

Redundancies
Redundancy
Cost (£k)


AHDB Meat ServicesMilton Keynes 461,535
Home Grown Cereals AuthorityLondon 381,095
Potato Council LtdOxford 24780
Horticultural Development CouncilKent 10380
Meat and Livestock Comission Commercial Services Ltd Milton Keynes365
Totals121 3,855




  The relocation of the Marine and Fisheries Agency to Tyneside and its transition to the Marine Management Organisation involves no redundancies.

DEPARTMENTAL REPORT: OTHER ISSUES

12.   Better regulation

Page 130 of the Annual Report notes that the administrative burden imposed by the Department was £460 million, and that this will be reduced by £56 million through already-identified better regulation measures. What are the main measures involved?

  The latest available version of the Defra Simplification Plan is that for 2008, which is available on the Defra website.[6] A list of all the main simplification measures, grouped by theme, can be found in Annexes A and B, with lower-value measures in Annex C. Please note that the list includes measures for Radioactive Substances, which have since been transferred to DECC. Work has begun on the 2009 Defra Simplification Plan, which will be available by the end of the year.

13.   Capability Review, March 2009

The Committee would like to have a copy of the Department's action plan for addressing the recommendations of the March 2009 follow-on Capability Review, or if no new action plan was produced then details of how the recommendations of the March 2009 Review will be taken forward.

  The action plan has been discussed with the Cabinet Office and agreed by the Defra Management Board. It shows how the recommendations of the Capability review are being taken forward as four workstreams:

    1. Delivering for our customers.

    2. Building confidence and pride.

    3. Improving our skills.

    4. Embedding our business processes.

  Each workstream has been assigned a Senior Responsible Officer (SRO) and the underpinning activities needed to ensure delivery have been set out. Progress against the action plan will be monitored on a quarterly basis by the Defra Management Board as part of the Corporate Dashboard. The Action Plan has been published on the Defra intranet.

  Please find attached a copy of the Capability Review Action Plan which was published on 3 July 2009.

14.   Core Expenditure Tables (Departmental Report pages 208-233)

 (i)   Table 1 in the core tables (page 219) shows that Resource DEL allocated to the "Less Waste" programme within the Sustainable Consumption and Production DSO is expected to decline greatly from an outturn of £216 million in 2007-08 to £59 million in 2008-09. The Department, on page 216, attributes this to the ending of the Business Resource and Efficiency Waste (BREW) programme in 2008-09. BREW returned £284 million to business raised from the landfill tax escalator over 2005-08 (Defra website: Historic arrangements; the BREW programme). If that process had continued, how much would have been returned in 2008-09 and 2009-10? How would such 2008-09 and 2009-10 figures have compared with the Department's actual expenditure on similar business resource efficiency programmes?

  Landfill Tax was designed to be revenue neutral. The BREW Programme was one way in which revenue was returned to businesses and was time limited to the period 2005-08. Revenue was also returned through a 0.2 percentage point reduction in employers' national insurance contributions and the reductions in corporation tax announced in Budget 2007.

  It is therefore not appropriate to calculate a hypothetical level of spending on BREW in 2008-09 or 2009-10, since this would require assumptions to be made about the overall distribution of revenue from the Landfill Tax. Funding for business resource efficiency and waste activity, previously under the BREW Programme, is now integrated with the wider range of Defra funding used in support of carbon reduction, waste reduction and recycling and resource efficiency.

 (ii)   Defra is bringing together a range of bodies under the leadership of WRAP (Waste and Resources Action Programme) to rationalise business resource efficiency work. How does WRAP's 2009-10 budget compare with the overall BREW budget for its final year (2007-08)?

  The different forms of support currently provided by separate resource efficiency delivery bodies sponsored by Defra will from 2010 onwards be procured or provided in one form or another by WRAP. Defra's grant offer to WRAP in 2009-10 is £56.6 million, which covers both its own work and the activities of the other delivery bodies. Defra's grant offer to WRAP in 2007-08 was £61.8 million, of which £13.7m was from BREW Programme funding. The overall BREW budget for 2007-08 was £122 million, with £25.3 million provided for other resource efficiency and waste activities.

15.   Core Expenditure Tables (Departmental Report pages 208-233)

Table 1 of the Departmental Report "core tables" also shows that the Resource DEL budget allocated to "Strong Rural Communities" is forecast to be particularly low in 2008-09 (£49 million), because of a reduction in Regional Development Agency spending "due to an agreement with HM Treasury". To what extent does this represent a reduction in government spending in rural areas? What did the agreement with the Treasury involve?

  Among other budget balancing measures the Department sought and secured agreement from HMT to reduce funding to the Regional Development Agencies (RDAs) as a necessary measure to set a balanced budget and to protect its priorities for 2008-09. Defra's contribution to the RDA's single pot in 2008-09 was reduced by £20 million as a one-off exceptional measure. The agreement with HMT was on the condition that Defra reinstated its contribution to the RDAs for 2009-10 and 2010-11 in line with the original CSR-07 settlement.

  Performance management of RDAs by Defra is fairly arms length due to the way RDAs are funded. Contributions from seven departments go into a single pot which is then allocated to regions by the Department for Business Innovation & Skills. It is then up to RDAs how they spend these funds within their region. Due to this single pot arrangement Defra is not able to assess exactly how much the 2008-09 reduction affected rural spending.

16.   Rural Payments Agency

 (i)   The RPA's 2008-09 Annual Report & Accounts notes that it has started a major programme of updating all mapping information in the Rural Land Register to support the Single Payment Scheme and other subsidy schemes, in response to previous European Commission disallowance action [HC 606, pp 7, 19]. How is this exercise being conducted? To what extent does the exercise rely on physical site visits or satellite imagery, and what assistance and guidance has been provided to farmers?

  The exercise to update the Rural Land Register (RLR) has been conducted in a series of stages to test the concept, approach and processes. Each stage has been reviewed and the information shared with industry stakeholders at regular meetings in order to shape the next stage.

  The first stage was an in-depth update with one large farmer, Co-operative Farms. Findings from this were fed into two further activities to test the processes and approach; a face-to-face mapping review clinic with around 40 farmers in December 2008 and a pilot involving around 1,000 farmers in three counties in spring 2009. The balance of the new maps then started to be sent to farmers throughout England in May after closure of 2009 SPS application period

  Each farmer involved should receive a set of maps generated from updated base mapping information. An accompanying letter explains what the farmer needs to do—check the maps, agree them or let RPA know of any changes the farmer wants to make, and emphasises the need to do this in 28 days.

  To simply agree the maps, RPA has provided farmers with a choice of response method—quick reply form to post or fax, 24hour automated phone line to call or phone number to send an SMS message. Farmers who want to make changes to the maps return a form and the relevant map, marked up. These changes are made by RPA and, within around 10 to 12 weeks, the farmer is then sent a second set of maps with the changes incorporated.

  The exercise is an electronic one using base mapping information from the Ordnance Survey 2008 mastermap as the main source. This is supplemented by existing aerial photography to confirm physical features. The findings from any site inspections carried out by RPA inspectors in the normal course of its duties in the first half of 2009 are also taken into account.

  RPA has worked with stakeholder organisations and the specialist industry publications to provide support and information on websites, in print and at events. All farmers have received a guidance booklet in the map pack which provides detailed help to check the maps and complete the form to make changes. RPA's website also has detailed questions and answers, sample publications and delivery schedules. Phone support is available for queries with mapping experts and farmers can set up a one-to-one appointment to get assistance, at their convenience. Wider awareness seminars around the country have been attended by farmers, agents and farm secretaries. RPA has attended industry shows, events and regular livestock auction markets to answer questions and provide assistance for farmers.

  RPA has worked with the industry bodies representing agents, advisors and consultants to ensure those best placed to help farmers have been briefed in detail in a series of seminars throughout the country.

 (ii)   What is the state of progress with this initiative, what timetable is being followed, and what has the work indicated about the previous accuracy on the Register?

  The intention is for map updates to be sent to around 115,000 farmers and land managers with land held on the RLR by the end of October with a view to including the results in pre-populated SPS 2010 applications.

  The state of progress at 25/09/09 is as follows:


Total


Map Packs Sent61,821
Map Packs Returned40,238
Accepted24,755
Asked for changes to be made15,483
Maps changes made and reissued293




  Early in the process around 900 farmers received maps which had not taken account of earlier changes notified by farmers. RPA took action to correct the problem as soon as it was identified and has contacted all the affected farmers. Other changes that have been made in response to customer demand to make it easier for farmers to update their maps including reducing field parcel number changes and including boundaries that are not permanently marked and therefore are not visible on Ordnance Survey maps and aerial photography.

  It is difficult to draw solid conclusions as to the previous accuracy on the Register from the recently conducted work, since there is no direct "like for like" comparison to be made It is expected that positional accuracy improvements made by Ordnance Survey since 2001 will lead to a very small change to most of the land parcels held on the register. On top of this it is expected to capture real world changes, such as new buildings, roads, and wooded areas, which were not on the 2001 maps, which currently form the basis of the RLR, and which farmers have not subsequently reported to RPA. Improvements are also being made to what is captured on the RLR, particularly the introduction of a separate layer identifying permanent ineligible features for SPS, such as buildings and hard standings.

  In addition there is a substantial churn each year in data held on the register with some 4% to 5% of the 2.2 million land parcels amended because of inspections, farmer notifications, amendments during SPS processing and around 20-25% of SPS claimants removing or adding land parcels.

 (iii)   Did the European Commission have to approve the initiative? Will the results have to be reviewed by the European Commission, and if so under what timetable?

  RPA has an obligation under EU Regulations to regularly update the mapping data held within the RLR. This initiative is being carried out in order to comply with that regulatory requirement and in response to audit findings which criticise the fact that current mapping data is based on Ordnance Survey 2001 information. RPA has maintained a dialogue with the European Commission to share plans for this initiative and it is anticipated that the outcome will be reviewed in future audits.

17.   Rural Payments Agency

 (i)   The RPA's 2008-09 Accounts have been qualified by the C&AG on several grounds—the way currency exchange rate movements are accounted for, high error-rates in determining SPS over-payment debtor balances, and disallowances [HC 606, pp41-43]. What is the nature of the "further work" that is underway (p42) to establish the extent of the overpayments? What is being done to reduce the future rate of overpayments to farmers?

  Each case identified as potentially having an overpayment is being reviewed back to 2005 when Single Payment Scheme entitlements were established. As well as the underlying entitlement position the claim data for each year is being reviewed taking account of rule changes from year to year and the knock on effects to other cases when entitlements have been transferred by farmers.

  Priority has been given to the cases identified by November 2008 and the RPA is on track to complete assessment of those cases by the middle of October and to inform farmers of any debt owed. Because of the nature of the SPS, overpayments will inevitably continue to arise, for example because inspections will identify that farmers have less eligible area than has been claimed. Actions have been taken, however, that should minimise the number of such cases:

    1. The update to the RLR referred to in Question 16 should ensure that the incidences of claims based on inaccurate land data will reduce;

    2. Increased uptake of on-line application should reduce the amount of farmer error in completion of the forms;

    3. RPA now has a more stable workforce and is ensuring that only sufficiently expert, trained, staff make amendments to claim details and so reduce incidences of overpayments being raised inappropriately;

    4. RPA has established a framework for checking the quality of its processing work, with team leaders checking the work of their staff and feeding back to them quickly on any errors so that corrective action can be taken before payment.

 (ii)   The C&AG's audit report notes that Defra "is due to commission an external review of the financial management of the Agency imminently; this will consider the capacity and capability of the finance function within the Agency" [HC 606, p43]. Who will be asked to undertake this review, and with what timescale? The Committee would like to see the results of this review when available. The Defra Resource Accounts also refer to a review of RPA financial management [HC 453, p35]: is this the same review?

  The Committee has separately been provided with a copy of the Defra News Release announcing the Department's intention to carry out a 2013 review of the RPA. The review is being carried out in the usual course of business to ensure that the RPA is ready to react to any changes to the Common Agricultural Policy in 2013 and will encompass not only RPA's financial management as suggested in the C&AG's report and Defra Resource Accounts, but also its operational activities and management capability.

  The review will be chaired by Katrina Williams, Defra Director General for Food and Farming and managed on a day to day basis by David Lane, an independent consultant with a proven track record of delivering this type of review within Central Government. The bulk of the work will be carried out by externally contracted professional services organisations that will be in a position to provide the full range of financial, process and operational review capability required. The review is likely to be completed by the end of March 2010 and the Department would be happy to share the key findings with the Committee.

DEFRA RESOURCE ACCOUNTS 2008-09 (HC 453)

18.   The Defra Resource Accounts identify exchange rate losses of 28 million for 2008-09 on Single Payment Scheme payments. To what extent do such losses reduce the size of the payments to individual farmers? To what extent do such losses reduce the overall funds available to pay farmers?

  The short answer to both questions is that the exchange losses (or gains) have no impact on either payments to individual farmers or the overall funds available to pay farmers. The entitlements that farmers make their annual payment claim against under the Single Payment Scheme (SPS) were allocated in Euros. However, unless they request otherwise, farmers are actually paid in sterling at a rate fixed in accordance with EU Regulations. RPA then reclaims the funding for those payments from the European Commission in Euros. The risk arising from exchange rate fluctuations between the date on which the rate is fixed (end September) and the date the funds are reclaimed (the payment window runs from December to June) is borne by RPA. The Agency manages this exchange rate risk through placing hedging contracts with the Royal Bank of Scotland. The hedging contract can only mitigate the risk, not eliminate it entirely. Volatility in exchange rates in 2008-09 highlighted some issues around the hedging arrangements and these are consequently being reviewed.

19.   The Defra Resource Accounts note an £80 million under-spend against EU funded Rural Development Programme schemes "because of slow uptake (particularly through RDAs)". Why has there been this slow uptake? Does this under-spend simply represent a slippage of funding from 2008-09 into 2009-10, or a permanent diminution of expenditure on these schemes?

  The England Rural Development Programme (ERDP) was approved by the European Commission in December 2007. This was nearly a year later than the start of the programme period, in part because of the delays in reaching agreement in the EU on voluntary modulation (transfers from direct payments to rural development) which was necessary to fund the programme. The measures being delivered by the 8 RDAs could not be introduced until programme approval had been received and, whilst some preparatory work had been undertaken by the RDAs, they could not enter into any agreements with beneficiaries without risk of disallowance of EU funding. Once the programme formally began in early 2008, it inevitably has taken some time for the delivery to gear up, through the process of initiating and developing projects and bringing them to fruition. This is particularly the case with the LEADER approach under axis 4 of the Rural Development Regulation, where the first task was to select and establish the Local Action Groups and agree their Local Development Strategies before expenditure on projects could begin. It is also worth noting that the economic downturn had the effect of slowing uptake of the programme, because of its impact both on access to private finance and the effect on business confidence to invest.

  Unspent EU funding may be rolled forward for up to two full years following the year to which it was allocated. Defra is working with the RDAs to establish a realistic profile for future budgets to enable them to fully utilise the available funding in future years.

20.   The Defra Accounts note that the Management Board are monitoring 12 major programmes (p32). What are those programmes?

  The 12 programmes monitored by the Management Board are listed below. These programmes were felt to merit monitoring at Management Board level because of their importance to achieving our key objectives and/or their cross-cutting nature.

    1. Waste

    2. Sustainable Performance Programme

    3. Responsibility and Cost Sharing Programme

    4. EU agriculture and Budget Strategy

    5. Farming for the Future

    6. Adapting to Climate Change

    7. Biodiversity

    8. Marine Programme

    9. Water Availability and Quality

    10. Managing Flood and Erosion Risk Sustainability

    11. Sustainable Consumption and Production

    12. Rural Development Programme England

21.   Note 13 in the Defra Accounts notes variances between Estimates and Outturns for the net operating costs of particular bodies. What are the reasons for the more significant variances -for Animal Health, Environment Agency and Natural England?

  The following table notes variances between Estimates and Outturns, and provides explanatory comments:


Area
Variance (£k) Explanatory Comments

Animal Health
15,500 Internal re-allocation of budget, mainly due to Marine Fisheries Agency
17,600Mainly due to activities in the Business Reform Project being deferred to 2009-10
Environment Agency76,600 Mainly water industry closed pension fund. Utilisation of the provisions is non-voted and results in a credit to the outturn which is not reported against the estimate
Natural England34,700 Mainly because the Genesis recharge costs, accrued for correctly in 2007-08, were paid in 2008-09 resulting in a higher Grant in Aid Requirement



22.   Note 21.1.4 in the Defra Accounts notes a £33.4 million onerous lease provision. What are the properties in question?

  An "Onerous Lease" is a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be received under it. The onerous lease provision was created to reflect that there were property (occupation) contracts in place in relation to properties that were surplus to operational requirements. The other key requirement was that the properties were in the opinion of the Department and supported by advice from professional advisers, unlikely to be disposed of early, or the liability eliminated through other means. Where parts of the property remain occupied the provision relates only to the costs of the vacant elements.

  The properties in question are:

    Eastbury House £990k

    The majority of the site is occupied by Other Government Departments, with the remaining vacant space available to wider Government. Location considered to be unattractive by Departments. No commercial demand.

    Trinity Court, Exeter £68k

    Former Agricultural Intervention Board office in poor condition. Competition in better condition.

    West Wickham, Summit House £488k

    Former HQ of the Agricultural Intervention Board declared surplus some years age. Surplus space has been successfully sub-let for a number of year, but has fallen vacant at sub lease end. Property is in a poor location for office use & demand has reduced due to economic conditions.

    Ponton Road, London £1,607k

    Property (document storage facility) declared surplus following a review of Defra's London filing provisions. Security requirements of other users on site severely restrict other potential users.

    1a Page Street, Westminster £26,142k

    Large central London office declared surplus following Defra's London accommodation review. Being marketed since vacation, but little demand from Other Government Departments for large amounts of central London office space. Location considered poor for commercial users.

    Ashdown House, Victoria Street, London £4,090k

    Review of significant Defra space in this building resulted in smaller requirement. Defra liable for vacated space under contract arrangements with the landlord. Reduced demand from Other Government Departments & commercial occupiers due to economic conditions.

23.   Both the Defra and RPA Accounts report a £362,000 loss for the RPA relating to Creature Comforts Ltd. The Committee would welcome some details, including the nature of the loss and its cause.

  In March 2003, Creature Comforts Ltd (CCL) applied for a grant under the Rural Enterprise Scheme, a scheme within the 2000-06 England Rural Development Programme (ERDP). The scheme was administered by the Regional Development Service (RDS), then part of Defra.

  In May 2005 CCL went into liquidation due to market pressures and changes to planning permission required to run the business effectively. At the time of entering liquidation CCL had not fulfilled the terms of requirements related to its grants which therefore stood to be recovered. RDS and RPA were, however, unable in practice to recoup any of their losses and the amount was consequently written off in August 2008.

  Responsibility for legacy schemes under the ERDP has passed to the Regional Development Agencies (RDAs) who have implemented a process of thoroughly assessing future grants under the Rural Development Programme for England 2007-13 socio-economic measures. Where planning permission is required the planning request is fully researched and must be approved by the Council prior to awarding a grant.










3   Review of progress report with full list of recommendations can be found at: http://collections.europarchive.org/tna/20081027092120/http://defra.gov.uk/erdp/schemes/es/es-report.pdf Back

4   http://www.defra.gov.uk/rural/policy/dso/index.htm Back

5   http://www.nao.org.uk/what_we_do/other_specialist_expertise/efficiency/csr07.aspx Back

6   http://www.defra.gov.uk/corporate/policy/regulat/better/documents/simplification-plan-081210.pdf Back


 
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