Examination of Witnesses (Question Numbers
260-276)
DAME HELEN
GHOSH KCB, MS
KATRINA WILLIAMS
AND MR
TONY COOPER
2 DECEMBER 2009
Q260 Lynne Jones: Is it purely complexity
that is the difference, or is there a difference in the procurement
approach?
Dame Helen Ghosh: I think it is
purely complexity. We have obviously had extensive discussions
with Scotland.
Q261 Lynne Jones: Perhaps you could
comment on that in comparison with other government schemes that
pay out money—the cost per payment. The NAO has advised
that you should work out exactly what IT is going to cost you
over the next five years. Are you doing that, how far have you
progressed and are you looking at the business case for a complete
new IT system?
Dame Helen Ghosh: Back to the
discussion we had earlier about the review and thinking about
the question of reprocurement of an IT system. That is exactly
what we will be doing. I very much doubt if at this stage we will
be able to say, "And it will cost us this much going forward",
but it will at least give us some kinds of benchmarks for what
that should be, depending, of course, on the outcome of the CAP
review and, we hope, lack of complexity there.
Q262 Lynne Jones: In September 2008
it was stated that in your risk register seven out of ten of the
top ten risks were assessed as red and three as amber. What is
the current situation on that?
Mr Cooper: I would have to send
you a note to tell you what colour they are. We have a top ten
list of risks and I would have to send you a note.
Q263 Lynne Jones: How accurate a
picture do you, at senior level, have about what is really going
on? In January 2008 you said that you were on top of things, and
that proved not to be the case. Do you really know what is going
on within your own Agency, within your own Department, in terms
of what the Agency is telling you?
Dame Helen Ghosh: I think in January
2008 that was a very specific statement in relation to overpayments.
That was what we said we thought we were getting close to pinning
down, and I think a lot of work went on through 2008, but, rather
as the discussion we were having earlier, with every stone you
place down, as it were, you turn another one up and you discover,
for all sort of reasons to do with the complexity of the system,
and (back to Mr Taylor's point) the management information you
have not got, you discover that the ground has shifted. So I think
that statement was only in relation to overpayments. In fact,
I think the Agency recovered something like £25 million in
overpayments in 2008,[19]
so we did take work forward, but we then discovered additional
problems. I think that is the challenge that we have, which is
why this exercise to say, "Enough, let us draw a line under
that and get a complete picture and move on", is so important.
Q264 Lynne Jones: Do you think you have
now got a complete picture of what the issues are, or are we waiting
until the review?
Dame Helen Ghosh: What we are
waiting for (and, as Katrina said, it will be with us in a matter
of weeks) is that by January we will be able to report to the
House on what the findings of that review are.
Q265 Lynne Jones: Are you doing anything
about the situation that was reported in the Farmers Weekly
of one payment of a penny being made to a farmer? How many such
payments take place? Whether it is £700 or £1,700, it
is an awful lot of money to pay out a penny.
Mr Cooper: It is one of those
frustrations that exist, not surprisingly, the odd penny payment.
You say to yourself, "Can we not just stop that? It is not
cost-effective to do it", but then you start to look at what
you would do with that penny. Do you invest in making a change
to the IT to identify when anything under a pound is paid, and
then how do you account for that money and, actually, the cost
of making that change was more than allowing those payments to
go out and now that we make payments into bank accounts directly,
electronically, it is actually quite an easy thing to do and the
number of penny payments has reduced drastically with the cessation
of modulation payments having to be made this year.[20]
Q266 David Taylor: I find that an astonishing
answer, Chairman. Again, I have been involved with systems. The
sieve at the end of the line for ludicrously low de minimis
payments, if you like, in a financial system is always there and
to somehow suggest that the cost of abandoning the payment at
that point would be less than just going through the system and
shoving a cheque for a penny in a 30 pence stamped envelope and
the negative impact that will have in a publicity sense, I find
an astonishing answer. Of all the answers I have heard from civil
servants over 13 years in this place that is the pantheon, the
silver medallist.
Dame Helen Ghosh: We are delighted
to get awards of any kind. In that case I am sure the answer is
that, if you had built it in from the beginning, it would, indeed,
have been a cost-effective thing to do, but I think a BACS payment
costs something like a penny itself, perhaps less than a penny,
and, therefore, you would have to have an awful lot of instances
like that which are bad in publicity terms but, actually, how
many times have you received—I certainly do—nice envelopes
from HMRC which say, "You us owe us nothing, we owe you nothing
and here is a cheque for nothing"? The idea that this is
a problem which is unique to the RPA is, I think, wrong.
Q267 David Taylor: I have no problems,
Chairman, with the force of that, the confirmation of "I
owe you", that is fine. I would accept a zero statement.
That would be okay. I do not believe that there are zero cheques.
Dame Helen Ghosh: I have received
cheques for nothing.
Lynne Jones: I think that what is particularly
amazing, though, is that you have such a large manual element
already in the system.
David Taylor: Why?
Q268 Lynne Jones: You have to do
a lot of manual interventions because the functionality in the
system is not there. Is that not correct?
Mr Cooper: Not significantly,
no. By and large, our systems now work in the way that you would
expect them to do. There are some additional controls that are
applied, which means that we take some cases (because of the nature
of those cases) to one side and deal with them and then put them
back on to the system, but it is not an enormous job. I think
this year, not surprisingly perhaps, our highest number of cases
(and it is 40,000-odd or something) went through the system without
any clerical intervention at all. So the number of cases that
we are processing automatically, without any intervention, is
increasing, and what that paves the way for is we have an electronic
channel, an online system, where farmers can claim online, and
that allows them to do some fairly simple but early validation
so that the common mistakes and common errors that we get with
the wrong codes going in on the form are prevented, so we can
actually help the farmer make sure their claim is in a better
state when it comes in. That reduces the amount of work we have
got to do and, in addition to that, we are going to be able to
make claims statements, entitlement statements available online.
I accept the point about how many farmers actually use the internet,
but there is a growing number and we are going to encourage them
to use those sorts of services.
Q269 Lynne Jones: At some point in
the NAO Report there was a comment that for each correction it
took eight days of work to change the correction which required
manual intervention. Is that correct?
Mr Cooper: That was specifically
on overpayments, and the elapsed time of eight days came down
to one day. There was a change in that period.
Q270 Lynne Jones: So there has been
an improvement in the amount of manual intervention.
Mr Cooper: There has, and one
that the NAO recognised in one of their earlier reports.
Q271 Lynne Jones: Could you send
us a note on to what you attribute that improvement?
Mr Cooper: Yes.
Q272 Dan Rogerson: I certainly look
forward to Defra making an even stronger case across Government
for rural broadband and the cost-effectiveness of that?
Dame Helen Ghosh: I can assure
you we are doing that very thing. We are having month-by-month
focuses in the Department on particular aspects of our business.
We had a farming month recently and the Management Board, each
of us, takes turns to do weekly diaries, and we had some guests.
We had two farmers who were guest diarists, very high hit rates
across the Department, but the first one, who was in Staffordshire,
the first point he made was, "If only I had broadband."
So we are arguing that very, very strongly in the Digital Britain
context.
Q273 Chairman: I think every farmer
will have noted with keen interest that the Department for Environment,
Food and Rural Affairs has now spent one month on farming, so
that has increased the profile of farming in the Department.
Dame Helen Ghosh: It has indeed,
and we are doing food in February. We have pictures of farmers
all over the department.
Q274 Chairman: Good. If you are doing
food in February, I hope you will invite us all round for your
sampling exercise.
Dame Helen Ghosh: Yes, we shall.
Q275 Chairman: I am going to wind
things up now because, Permanent Secretary, I know that you have
another engagement to go to. For the reassurance of farmers who
are still waiting to know where they stand with reference to the
2005-06 year, when do you think that will finally be drawn to
a conclusion? For some it has been a bit like the financial sword
of Damocles hanging over their heads.
Dame Helen Ghosh: As I say, one
of the purposes of the review and of the commitment I gave to
the PAC was that we should, indeed, be able to finalise the overpayments—indeed,
that is specifically about overpayments, but that does not mean
we are not concerned about underpayments—through this review
and be able to reach a view by January about what they were and
how we were going to handle them. I would not say we will definitely
do that in January because there will be some issues about negotiations
with individuals and discussions about de minimis limits,
and (back to the point earlier) if there is an issue about writing
off debts we will not recover, clearly that will need careful
discussion with the Treasury, but early next year.
Q276 Chairman: I am pleased to hear
that. We look forward as a Committee to seeing the outcomes of
the review, and I can but hope, as I will not be chairing the
Committee in the next Parliament, that whomsoever takes on this
onerous role will not find themselves doing yet another inquiry
into the Rural Payments Agency. What would be genuinely nice to
see is an appropriate section in Defra's Annual Report which points
to the full implementation of the positive things that you are
going to be doing and that customer satisfaction continues to
rise, that all the old problems are sorted out once and for all
and that you will be in a fit and proper state to deal with 2013
and beyond. So, I suppose, in terms of this short inquiry, we
have put the benchmarks down, you are going to supply the solutions
as a result of the review and we look forward very much to seeing
that. May I thank all three of you for your contribution this
afternoon. The Committee wishes you well in the future, if not
for your own sakes but also for the many thousands of farmers
whose interests you have at heart. Thank you.
Dame Helen Ghosh: Thank you, Chairman.
19 2008-09 financial year. Back
20
Note by witness: The number of cheque payments of less than £1
has reduced from 58 under the 2005 SPS to 3 under the 2008 SPS. Back
| 
