Examination of Witnesses (Questions 21-80)
DAME HELEN
GHOSH DCB AND
MR TONY
COOPER
28 JANUARY 2010
Q21 Chairman: We welcome Dame Helen Ghosh,
Permanent Secretary of the Department for Environment, Food and
Rural Affairs, and Mr Tony Cooper, Chief Executive of the Rural
Payments Agency. Thank you very much for coming. You know why
we have invited you and are you probably aware of the kinds of
things we are to ask about. Do you want to say anything by way
of introduction?
Dame Helen Ghosh: Yes. Looking
at our memorandum and correspondence with the Ombudsman over the
past couple of years on these cases, the department absolutely
accepts her finding that there was maladministration in terms
of getting right the service provided by the RPA. Having lived
through many of these hearings since arriving in my department
late in 2005 we have explained and apologised to farmers in particular
for the poor service they have received and the reasons for that.
No one could read the stories of Mr W and Mr Y without in one
sense feeling enormous sympathy for them and deeply regretting
that the service they received was so poor. There are however
two areas where we disagree with the Ombudsman's findings. The
first is the issue about whether or not the department and agency
were open and accountable. There is slight ambiguity in various
parts of the report. Based in part on personal observation in
the early months of 2006 the agency and ministers genuinely believed
up to the weekend around 14 to 16 March that it would be possible
to make the bulk of payments to farmers by the end of that month.
As the Ombudsman says somewhere in the report, no one was being
dishonest or untruthful. To go back to the many hearings on this
subject I have lived through, these reflect an essential lack
of capacity in the agency, as it then was, to understand the scale
of the task ahead of it. I am sure we shall return to that point
later in the hearing. The point about financial redress is quite
narrow though I know it is one that concerns the Ombudsman very
much. For us the key issue is whether the aspirational target
announced by ministers during 2005 and into 2006 about when the
bulk of the payments would be made counts as an expectation and
promise. We believe that it was not that but that it was an aspirational
target. To make calculations of financial redress on the basis
of that date rather than the statutory date at the end of June
is wrong, would set a dangerous precedent and would not be consonant
with our obligations. We treated the target very seriously in
the sense that only six weeks later we paid out, at the risk of
both disallowance and the successful completion of operations,
partial manual payments including payments to Mr W and Mr Y, and
only six weeks after the end of March we paid out effectively
80% of the amount. When one looks at the calculations included
in the report and the recommendations the Ombudsman makes for
redress, although she says there was no legitimate legal expectation
there was nonetheless a reasonable one. All of the calculations
are around the question of delay. We say this is not a valid basis
for making payments. We do and have made both consolatory payments,
which we are proposing to make in these two cases, and ex gratia
payments. We have not turned our back on making ex gratia payments
where we can see that there has been a specific error or statutory
failure on the part of the agency and a directly related financial
loss. We are strongly committed to making consolatory payments
where there is such a direct link or there is stress and worry
as vividly described in these two cases, but for us the key issue
is whether those aspirational targets to pay the bulk of payments
by the end of March are ones against which one can calculate financial
redress.
Q22 Chairman: What is the difference
between an aspirational and non-aspirational target?
Dame Helen Ghosh: I use the adjective
in the sense that, as you will be aware in the case of executive
agencies and NDPBs, we set management targets for all our organisations.
Sometimes they will be deliberately stretching, in which case
there is an understanding of that when they are set; in other
cases they will be ones that the agency and NDPB are likely to
hit. When I use the term "aspirational" I mean that
is our aim. To go back to the point about honesty and accountability,
that was the belief of the RPA, Lord Bach and the Secretary of
State at the time. They all believed, having said that was what
they hoped to do and that was the management target they had been
set, up to the 11th hour that it would prove possible.
Q23 Chairman: I do not believe that
is an issue. Tony Blair believed there were WMDs, but I do not
believe that is the point. The question is whether or not there
were any. I do not believe the Ombudsman is challenging people's
honesty or belief. If as you now tell us there are different kinds
of targets which have different status and mean different things
perhaps people should be told.
Dame Helen Ghosh: As you said
that I thought that in a sense it did not matter. Any target that
we give an agency or NDPB is effectively an operational target,
not a legal or statutory one. In this case our argument does not
really rest on whether or not it was an aspirational, stretching
or management target but on the fact that in order to give the
best customer service we could, which is perhaps a rather ironic
way to put it, we wanted to urge the agency to aim to make the
payments by the end of March. It was not a legal requirement.
The distinction which I suppose is an issue of principle for the
Committee and therefore one on which we stand is: should a management
target, whether aspirational or not, trigger effectively a legal
obligation to pay compensation, or should the legal target—you
will know that the payment window closed at the end of June—trigger
that? In a sense whether it was aspirational or not is a bit of
a red herring.
Q24 Chairman: You can turn it on
its head and look at it from the point of view of the people who
are using the services of this agency. If they hear it being said
that we expect the agency to deliver x per cent of payments
by y date and people act upon it because that is what they
have been told that is perfectly reasonable, is it not? If it
turns out that that does not come to pass, not because people
have been dishonest but because it just has not happened, they
are entitled to say they have made all kinds of decisions on the
basis of what they have been told which has turned out not to
be the case.
Dame Helen Ghosh: I entirely agree
that is highly regrettable. Therefore, one of the lessons one
learns from this experience is that one needs to be extremely
careful about how one expresses the kind of management target
one sets an agency.
Q25 Chairman: Mr Cooper, one of the
Ombudsman's recommendations was that you should send what she
called a personal written letter to these people who had suffered
at the hands of the agency. This does not have to be anonymous;
a letter was sent to Mr Borthwick. You wrote to him saying you
were sorry for what had happened, but the letter was not signed
by you; it said "pp". Just to compound the whole episode,
is it not appalling that you did not write him a personal letter
and sign it?
Mr Cooper: If I may explain the
situation that arose, I wanted to send the letter quickly and
to sign the letter myself. Unfortunately, that letter was issued
on either the 20 or 21 December and I was unable to travel to
the office because of the wintry conditions. I considered very
carefully whether I wanted to delay it and sign the letter personally
or whether it should go and I concluded that I wanted it to go.
That was why it was signed "pp" by my secretary.
Q26 Chairman: That is a plausible
explanation, but you could have put a note at the bottom saying
that you very much wanted to sign it personally and send it as
quickly as possible but you were stuck in the snow and could not
get to the office. That would have been all right, would it not?
Mr Cooper: I completely accept
that.
Q27 Mr Walker: I am sorry to bang
on about the March date, but why was the target date of March
set? What were the department's internal imperatives that led
you to set a target for the end of March as opposed to trying
to meet just your legal obligations in June?
Dame Helen Ghosh: I was not in
the department for the whole of 2005, but my understanding and
research suggest that it was in order—again, it might sound
slightly ironic in these circumstances—to provide a good
service to customers. As the Ombudsman's report makes clear, there
was a great deal of concern among the farming community that there
would be a long gap between the last of the old-style payments
and these ones. We made very clear at the beginning of 2005 that
we would not begin payments until February which in terms of cash
flow was late for many of the people involved, and on advice from
the RPA ministers thought it reasonable having started only in
February to say that payments should be made as rapidly as possible.
That was the basis of it.
Q28 Mr Walker: Was a capability audit
undertaken before dates were changed to help the department ascertain
when it would be in a position to set these aspirational targets,
or was it done just on the back of an envelope and you said you
would try to do it?
Dame Helen Ghosh: The material
in the report is very helpful on this. There was a whole series
of reports by the Office of Government Commerce into the status
of the project at the various gateway stages which made recommendations
about the project. It was not without external scrutiny. One of
the lessons government has learnt from the RPA experience and
I certainly picked up with the Office of Government Commerce subsequently
is that the power of the red flag on a gateway report has been
significantly strengthened. In those days one could have a red
flag which meant one had to deal with things before proceeding.
Therefore, one could leap over the barrier and provide money and
resources or resolve some policy issue and carry on, which was
effectively what happened. Risks were highlighted and the agency
believed that it had dealt with them. Now a red flag means one
must stop and think; it is extremely serious. One of the lessons
we have learned from the experience and fed into the government
process is that when it is red it really is red.
Q29 Mr Walker: Why do you believe
farmers remain so upset with the department and have a great sense
of grievance about the way they have been treated?
Dame Helen Ghosh: I think farmers
have long memories and the service they got in 2005-06 was extremely
poor. There were policy/political issues about the changes the
Government decided to make in terms of the nature of the payments.
As opposed to the noise in the media and in representative groups,
if one looks at customer satisfaction indices and the rate at
which we have speeded up payments to farmers, since those dark
days of 2005-06 80% of farmers received their payments at the
very beginning of December of this year and that is reflected
in the payments to Mr W and Mr Borthwick. Every year we have increased
the speed at which we pay. As has come out from the correspondence
with the Ombudsman, we have put an enormous amount of resource
into doing that. I believe that is why the farming community continues
to feel uncertain and remember those difficult days.
Q30 Mr Walker: We issued a report
into the use of official language and jargon. You talk of lessons
learned. One of the lessons learned is that farmers do not speak
civil service language. When is an aspiration an aspiration and
when is it a promise? Are you running workshops with farmers so
they can understand the language emanating from your department
and do not have unrealistic expectations?
Dame Helen Ghosh: I shall ask
my colleague to say a bit about those sorts of contacts and how
we have made things simpler. The theme that runs through this—it
comes back to the question whether or not the department is serious
about customer service—is that this scheme, like so many
others related to farmers, is very tightly controlled by European
regulations. All the time we are walking along a very narrow path
between the EU and potential disallowance on the one hand and
service to farmers on the other, of which our partial payments
in 2006 were an example. The classic instance for me is that whenever
one meets a livestock farmer understandably he is upset when he
is described as "negligent" if one of his cattle does
not have its ear tag. That is a euro word. What we are trying
to do is put the customer service and eurocratese in two boxes.
Perhaps my colleague wants to say something about the progress
we have made. There is more to do.
Mr Cooper: It is very much work
in progress. It is in part a cultural thing. The starting point
for the agency was to invite some farmers to talk to us and tell
us what it was like being on the receiving end. We also went out
and video-ed some farmers with that sort of explanation and applied
that to the training we gave to staff. We have been looking steadily
at some of the literature we send out. We send out a lot of literature.
The guide is complex and difficult but we are trying to improve
the language. The farming community has responded very positively
to the RPA in some areas and offered to take some of our staff
who had never been onto a farm to see exactly what it was like
and why it mattered and why the payments made to farmers also
mattered. There is a good relationship in some areas, not in all,
and it is definitely having an influence. From my perspective
of the customer focus there is still a long way to go and it is
proving quite difficult to organise around the customer rather
than our processes, but that is where we are trying to get to.
Q31 Mr Walker: So, on joining all
your staff should be given a pair of green wellies and sent out?
Mr Cooper: Yes.
Dame Helen Ghosh: Whenever I visit
the RPA I am amazed how many people who work there are farmers.
I believe that a third of the RPA inspectorate is made up of farmers.
Q32 David Heyes: Following on from
what Mr Cooper said, you describe the steps you have taken to
try to improve things like customer relations. There is a huge
contrast between that and what the Ombudsman told us in her evidence
a short while ago. Correct me if I am wrong—she is sitting
here—but the impression I gained was that she believed the
problems in the RPA were symptomatic of systemic failures in Defra.
There are deep-rooted problems: there is a failure to recognise
the significance of customer service and properly understand what
it is about and a failure to have a proper complaint-handling
system and to learn from that. She gave us an undertaking to engage
with the department to deal with it. These are very serious accusations
about a major department of state and I have not picked up from
anything either of you has said so far that you have any recognition
of it.
Dame Helen Ghosh: Absolutely we
have recognition of that. As I said in my opening remarks, we
both accept that in terms of the service we provided to farmers
we significantly fell below any reasonable explanation in 2005-06,
and we have put an enormous amount of investment to focus on the
customer through the RPA systems and across the rest of the department's
activity. For example, an enormously significant part of our investment
and the whole change in the process once Mr Cooper, and before
him Mark Addison, took over was to change the IT system so that
when a customer rang we could have a single customer view and
deal with the particular complaint. I shall ask my colleague to
say something about the complaints system in the RPA, but the
Ombudsman's guidance is extremely clear and useful and is the
principle on which we base our complaints-handling processes.
I do not like to use the word "dispute". Our difference
of view with the Ombudsman is not about customer service or how
we handle complaints; it is about the essential issue of whether
the targets produced a sufficient expectation to require the payments
she proposes.
Q33 Chairman: It would help if I
asked the Ombudsman whether that is an accurate description of
the point at issue between you.
Ms Abraham: No. I do not know
whether Dame Helen heard my previous evidence. One of the points
I made was that we had not made a finding of maladministration
in relation to the failure to meet the target of the end of March.
Listening to the proceedings this morning I really wonder whether
Defra is resisting my recommendations on the basis of a false
understanding of the findings we have made.
Dame Helen Ghosh: No. This report
has gone through a long history from a point where in early drafts
the Ombudsman rested on an argument about a legitimate expectation.
Indeed, she has not specifically found maladministration on the
basis of a legitimate expectation to pay by the end of March.
I absolutely understand that is not the case. I do not like to
quibble about technical issues, but in terms of government and
precedent I must do so. If one looks in paragraph 59 at what farmers
and growers could reasonably expect and in particular the calculations
of what redress and ex gratia payments she proposes they are implicitly
about delay. That is the difference between us. We absolutely
do not argue that the Ombudsman has specifically found maladministration
around that. She has found general maladministration of which
there is plenty in terms of the processing of applications and
the information received by these two applicants. It is a very
narrow point and I do not think that should mean Defra is not
interested in customer service.
Q34 Chairman: I think we are getting
in a bog here.
Dame Helen Ghosh: I suspect we
are.
Q35 Chairman: It is generally accepted
that it is the job of the Ombudsman to find out if there has been
maladministration leading to injustice; that is her trade. She
is the expert on whether there has been maladministration, whether
it leads to injustice and then what the appropriate redress should
be. She does it day in, day out.
Dame Helen Ghosh: Absolutely.
Q36 Chairman: In this case she has
found maladministration and you do not dissent from that. She
has established that it led to injustice and has applied her normal
principle of redress which is generally accepted by government
bodies and departments. You have not accepted it and we are trying
to establish the grounds on which you do not accept it, because
the acceptance of it is implicit in what the deal is in relation
to the Ombudsman's office. You say in your reply that you have
not breached a legal requirement. That is not what the Ombudsman
is about. The question is not whether you have breached a legal
requirement but whether you presided over maladministration leading
to injustice which produced the demand for redress. You are talking
in different territories, are you not?
Dame Helen Ghosh: I hasten to
reassure the Committee that we have not gone into this unthinkingly.
What we have done is to look at comparable cases in both Defra
and across government where ex gratia payments, financial redress
as well as consolatory payments have been made. Our advice is
that financial compensation is paid by Defra in cases where there
is a clear failure of a statutory function or error by the authority
which has led to a clearly definable financial loss. The recent
case in which the Environment Agency was involved in waste in
the North West is such a case. There the Environment Agency has
happily said that it failed in its statutory duty and it will
pay the relevant householders who have been affected by the illegal
waste a financial redress. That included the fact they could not
sell their houses and so on. We have paid tens of thousands of
pounds from the Defra network in that case; ditto the RPA has
made ex gratia payments. Probably the largest one was the one
Mr Cooper has described to me.
Mr Cooper: In the case of which
I am aware the farmer had submitted an application and we had
no record of receiving it but when we sought evidence of it being
sent to us we accepted that it probably had been submitted and
somehow there had been an error at the RPA end. There was no valid
claim and therefore under the European legislation we could not
pay that as a subsidy payment, but we have accepted it and for
a number of years we are making a payment equivalent to the subsidy
of an ex gratia amount.
Q37 Chairman: You know why you make
certain payments for certain things but I am not sure you understand
what the Ombudsman is about and why the system was set up by Parliament
all those years ago. The Ombudsman has set out her principles
and how she proceeds and nobody can fail to understand it. She
believes that Defra just does not get it in terms of what she
is about. She does not understand why what for her is a straight-down-the-line
finding is not simply bought into when the assumption is that
it will be.
Dame Helen Ghosh: Chairman. I
would be happy to write to the Committee with more detailed technical
analysis, but it comes back to the question: against what date
in 2006 do you say there has been delay? Do you say the delay
was effectively around the target or would the delay have been
around the statutory date?
Q38 Chairman: I do not think we want
to return to those technical matters. I know this has been endlessly
raked over by the NAO and other committees. We will not go there.
The difference in this case is that it has been meticulously examined
in terms of the individual experience of particular farmers. If
you read the report and see how it was dealt with you get an incontrovertible
finding of maladministration. The Ombudsman then asks: has this
led to injustice? She finds that it does, documents exactly how
it has happened and then applies her redress principle. It is
not a technical matter. I cannot understand why you want to dissent
from the logic of that process.
Dame Helen Ghosh: We absolutely
do not dissent from it, which is why we are offering what is by
standards across other government departments a high consolatory
payment for the worry and stress caused. Again, we have looked
at parallels across other government departments. We accept we
should pay for the worry, stress and anxiety. We absolutely accept
this is not a finding of maladministration but it is implicit
in the calculation. I am sure the Committee does not want to go
into it word by word, but the idea is that farmers made choices
because they did not have access to funds when they were expecting
them or when they needed them. These are phrases about whether
if we had paid at the end of March the situation would have been
different from our interim payments six weeks later. That is the
only issue between us. It is not about customer service; it is
about what triggers a calculation of actual financial loss. Mr
Cooper has described a situation where it is extremely clear cut.
I think that looking across other government departments it is
a very clear-cut issue.
Q39 Chairman: I am tempted to read
the summary sections of the Ombudsman's report where she describes
what she believes the maladministration is. It is not what you
are describing. She describes all the ways in which this agency
completely messed up which had these consequences for the individuals
concerned, so the maladministration is established per adventure.
Dame Helen Ghosh: Absolutely,
and I am not arguing about that at all.
Q40 Chairman: The Ombudsman quite
rightly feels, as do I having read the report, that your description
of what is at issue between you is not correct.
Dame Helen Ghosh: The only thing
at issue between us is the question of paying financial redress
as well as a consolatory payment on the basis of calculations
of what would otherwise have happened.
Q41 Chairman: We asked her about
that in the previous session. The Ombudsman does not accept the
calculations of loss that the farmers have claimed.
Dame Helen Ghosh: It is a very
complicated issue.
Q42 Chairman: They wanted tens of
thousands of pounds and the Ombudsman came up with £3,500
and £5,500. These are very modest sums relating to only two
people with another 22 in the wings. You have come along with
£500 compared with the previous offer of £200 or whatever
it was. There is little financial distance but a chasm of principle
between you. We cannot understand why the department wants to
dig in on an issue that does not have seismic consequences but
is rather fundamental to the operation of the ombudsman system.
Dame Helen Ghosh: I absolutely
accept the point made by the Ombudsman that ultimately the fiscal
and administrative factors should not be the subject of our consideration
here. The question is whether if any government authority said
it had a non-statutory target to do something by a non-statutory
date in any case where it failed to hit that target the financial
clock would start to tick because x expected it to happen
and therefore the public purse should pay out y against
that non-statutory target. That is the only point. I am very happy
to provide more material to the Committee or discuss it further
with the Ombudsman. One issue is that although the Ombudsman over
the period of her draft reports and then final report moved away
from the concept that there was a legitimate legal expectation
and maladministration and therefore loss could be calculated on
that basis, in terms of practical calculation it is implicit in
the estimate of financial compensation. That was why I said at
the beginning it was a very narrow point.
Q43 Chairman: Did you take advice
in government on this?
Dame Helen Ghosh: We took both
legal advice and consulted. One of the reasons I was unable to
get back to the Ombudsman as quickly as I had hoped late in 2009
was that we had to consider the views of other government departments
on whether or not this was indeed a valid concern.
Q44 Chairman: Did you go to the Treasury
and the Cabinet Office?
Dame Helen Ghosh: We did the normal
clearance of issues around the appropriate Cabinet committee which
would include both of those departments.
Q45 Chairman: You say that the general
position you advance here reflects an agreed position in government?
Dame Helen Ghosh: Indeed.
Q46 Chairman: It is not consistent
with Treasury guidance. For example, the manual with which you
will be familiar says: "Where public sector organisations
fail to meet their standards, or where they fall short of reasonable
behaviour in relation to those they do business with, it may be
appropriate to consider offering remedies"; and it goes on
to say "in more serious cases financial payments beyond what
the law or contract strictly requires.'
Dame Helen Ghosh: Indeed.
Q47 Chairman: I do not think you
can appeal to legal entitlements, which is what you do in response
to the Ombudsman, when the whole point of the system is that it
is not legally based; it is what you do when very serious kinds
of maladministration are found. The Ombudsman demonstrates that
serious kinds of maladministration were found here and they had
consequences which have to be remedied.
Dame Helen Ghosh: Indeed, and
the system of consolatory payments used by departments and the
system of ex gratia payments we would use are precisely in line
with that. I am not familiar with the details of the case but
one case we looked at involved the Department of Health. There
a gentleman tragically died as a result of delays or errors in
the ambulance service. In that instance the remedy was a £1,000
consolatory payment. What we thought in terms of the seriousness
of the impact and the remedy was that in this case given our concern
about the principle about whether it was a legal, statutory deadline
or a target a high level of consolatory payment by cross-government
standards was the appropriate thing to do, and the Treasury agreed
that we could make that payment.
Q48 Chairman: Five hundred pounds
is a high level of consolatory payment?
Dame Helen Ghosh: If you look
across government it is a high level of consolatory payment as
opposed to financial redress. There are two issues here: financial
redress on the basis of calculation of actual loss against tests
and consolatory payments that are for worry and distress, and
the offer of £500 is for worry and distress.
Q49 Chairman: Did no sensible person
say, "Do we really want to get into an argument about the
difference between £500 and £3,000 on an issue that
will be presented as a great conflict of principle when it is
completely unnecessary"? Was there not a voice of sanity
that could have prevailed?
Dame Helen Ghosh: We debated significantly
and discussed with the secretary of state at length what the response
to this should be. I do not want to go into the issue of whether
we took into account broader fiscal and administrative considerations
because we wanted to look at the facts of these two cases, but
clearly in government you have to think of the wider ramifications.
If you can make a calculation of financial loss suffered by people
who did not get a partial payment in May 2006 in that six-week
window in theory if we accept the principle that appears to underlie
these calculations potentially you could have a large number of
applications from people saying, "I would like to prove that
similar to the evidence in the report I suffered this loss and
I paid this much interest." You could have a very high bill
for the taxpayer retrospectively for putative financial losses
in that period. There would also be a terrific burden on the RPA.
Although we were looking at the cases of these two customers as
government you have to consider the implication of the wider principle,
which is why we asked other government departments what they thought
we should do and whether they thought we were doing the right
thing.
Q50 David Heyes: Our role as a committee
is to focus on the legitimacy and credibility of the role of the
Ombudsman and through that the legitimacy and credibility of Parliament
because the Ombudsman is Parliament's officer. I have heard nothing
in the past 20 minutes of discussion to convince me that you are
hearing what the Ombudsman is saying to you. I thought, perhaps
wrongly, that at one moment you interrupted the Ombudsman in full
flow when she was trying to tell you why you really did not understand
what she was saying. There is a need for a serious dialogue here
with a parliamentary officer who says she believes there are systemic,
deep-rooted problems in Defra, of which this is symptomatic, and
a failure on the part of the department to understand the seriousness
of the problems of its organisation. I am not persuaded by anything
I have heard so far that you really are listening to that very
important message from the Ombudsman and, through her, from Parliament.
Dame Helen Ghosh: I apologise
if it appeared that I interrupted the Ombudsman. She and I clearly
have had a number of written or in person discussions about this
report as it has gone through its various stages. I would be more
than happy to continue that dialogue. The charge has been made
that the department does not take customer service or the role
of the Ombudsman seriously. We are focusing on this particular
example. I cited an example where recently through one of our
NDPBs, the Environment Agency—part of the Defra network—we
made a very large financial compensation payment on the back of
a recommendation by the Ombudsman. I do think there is a fundamental,
systemic issue; this is an issue about a particular report and
particular set of circumstances, but I would be very happy to
have further discussions with the Ombudsman and her team if the
Committee thinks that would be helpful.
Q51 Chairman: What would the discussion
be about?
Dame Helen Ghosh: If the Ombudsman
is concerned that there are broad issues beyond the clear difference
of opinion on this report then we need to talk about them. I would
like to talk about the other instances. What are the other instances?
Does it relate just to this or to other policy areas of Defra?
How can we come closer together?
Q52 Mr Prentice: You have faced a
lot of criticism. Do you feel hurt by it?
Dame Helen Ghosh: Personally?
Q53 Mr Prentice: Some of it is getting
pretty close to personal criticism. I am talking about parliamentary
committees, the Defra Select Committee and comments by colleagues
on the Committee of Public Accounts. We have had reports from
the National Audit Office. I am not an expert on these things
but reading those references I get the impression that the department
under your leadership is in many ways dysfunctional; you just
do not have a grip on things.
Dame Helen Ghosh: To take the
second point first, the department is absolutely not dysfunctional.
If you look at the capability review under the new system in early
2007 and the further review early this year the department under
my leadership—I do not normally talk about myself—was
found to have made very significant progress across a whole area
of organisational development. It now ranks well in the top half
of effectiveness of government departments. We have dealt with
some fundamental issues around financial management and other
systemic issues. I and my leadership team are praised extremely
strongly for what we have done.
Q54 Mr Prentice: It is not my intention
to be personal; that is not me, but in December 2009 the Committee
of Public Accounts said that the department and agency accounting
officer—you are the accounting officer—failed to get
to grips with issues resulting in a lack of any clear progress
in addressing its concerns. The Committee went on to say that
that was wholly unacceptable. Why would the Committee say that
if the department was running like a well-oiled machine?
Dame Helen Ghosh: Although in
this context it is potentially a slightly controversial thing
to say, the RPA is a small part of what Defra does. There are
very many other areas of activity in Defra on which I as permanent
secretary must focus attention, but even in relation to the RPA
there is a significant group of customers: 100,000. In relation
to this if you look at what we have done I turned up just as the
collapse happened.
Q55 Mr Prentice: You have been there
for four and a half years.
Dame Helen Ghosh: Most of the
events to which this relates were before my time. I replaced the
chief executive with Mr Addison and then Mr Cooper. As a board
we have invested a great deal of money in a turnaround programme.
We have changed the processes and significantly improved the speed
with which we pay farmers and the levels of customer satisfaction.
As I told Mr Leigh and members of the PAC, we concentrated on
customer service. The issues that concerned the PAC in particular
were whether while we were doing that we effectively put too much
money into it and focused enough on sorting out some of the issues
around overpayments in earlier years and recovering them for the
taxpayer. Their message was almost that we had done too much and
had been unthinking in the amount invested to solve the problems
of the RPA. I shall be writing to Mr Leigh tomorrow to say that
as part of our current review by the spring of this year we shall
be absolutely sorting out those problems.
Q56 Mr Prentice: There is a parallel
universe here. I hear what you say but I also have in front of
me extracts from the most recent report of the National Audit
Office of October 2009. The NAO says of the scheme that scheme
payments show little sign of increased accuracy with estimated
overpayments of £24 million and underpayments of £30
million in scheme year 2008 when you were there. The PAC talks
about your department agreeing to provide it with a clear action
plan by the end of this month.
Dame Helen Ghosh: Which I shall
be doing tomorrow.
Q57 Mr Prentice: You have left it
until the very last moment, have you not?
Dame Helen Ghosh: If I may go
back to the NAO report, the concerns are about a very particular
issue that derives in part from having made emergency interim
payments in 2006 to help farmers, namely the extent to which we
had overpaid farmers that year and we needed to get it back. It
is extremely complicated because of the change in data year by
year and the complexity of the system. The calculation of debt
which is much less than £100 million is a proportion of the
£1.5 billion that we pay out. That is the level of inaccuracy.
By comparison with other parts of the government system that is
quite a low level of inaccuracy in cash terms. What we have been
doing over the period, and particularly since then, is to get
Deloittes working with Mr Cooper's team to work through those
overpayments and establish and recover as far as we can the outstanding
amounts. It is an incredibly complicated thing to do because the
system is incredibly complicated. We have now done that and that
is why it has taken us a reasonable amount of time and why I shall
be writing to Mr Leigh tomorrow. We shall make sure we recover
the payments or write off the debt appropriately, but we are not
sitting on our hands; it is just a function of the fact that the
system we have to operate is extremely complicated. One thing
that work has shown which emerges in the view that European auditors
have taken of us is that processing has become significantly more
accurate year after year. We are not as inaccurate as we were
in the fateful year 2005-06; we have become progressively accurate
in a very complex scheme.
Q58 Mr Liddell-Grainger: I represent
a lot of farmers in Somerset and they tell me that you and your
organisation are incompetent. You have spent an inordinate amount
of time not putting your house in order. They ring Exeter and
get no answer; they ring and are told one thing and when they
call again they are told something else. I do not recognise anything
you have said today. I put on one side for a moment the Ombudsman's
role in it; I am just talking of the organisation. You have cost
the farming industry between £18 million and £20 million
just on what you got wrong. There are contingent liabilities of
£131 million built into your accounts and you have been fined
by Europe. I cannot understand what else you can do to make it
worse.
Dame Helen Ghosh: I absolutely
understand the frustration of farmers when they do not get good
customer service. We have focused on speeding up payments to farmers
and the kind of increasing and very high levels of contact with
them. Assuming it is a representative customer sample, the fact
is that 76% of farmers compared with 39% in 2006 are now happy
with the service. Although you say you do not recognise the picture
there is another picture here. I do not know whether my colleague
wants to comment on the Exeter office.
Mr Cooper: There is usually an
explanation as to why somebody will receive different information
and we struggle sometimes to explain that clearly to the farmer.
It could have something to do with the language we use if we are
still using civil service-speak rather than language that the
farmer understands. Maybe the mapping exercise is a good example.
We learned the lessons of what happened in 2005 and took a different
approach. We do not send maps to farmers, wait for them to mark
them up and send them back and then read it, understand it and
send it back and find it is wrong. We telephone the farmer and
offer a face-to-face meeting to go through it. We have done it
with lots of farmers and agents. It is not perfect. The Ombudsman's
report is very helpful in illuminating the sorts of difficulties
that arose with people being passed from pillar to post and one
office not knowing what the other was doing. That was a problem
we had to resolve and that is why it will take 18 months or so
to improve the IT system to gather information that is helpful
to case workers so they can have a view of what is happening in
a particular case. Those sorts of changes do not happen quickly.
It took probably until about April 2008 to get it into a good
state, and we have continued to build on that since. I fully accept
there are further improvements to be made, but I suggest that
all of my staff are committed to trying to do a good job. Approximately
half of my staff are working on the Single Payment Scheme and
all are very committed to trying to provide the best possible
service they can.
Mr Liddell-Grainger: That is just flannel.
I represent about 600 individual farmers. I have a quarterly farming
meeting with farmers and they come and go as they want. I have
yet to have a meeting since you started when your organisation
is not top of the agenda. Maps are wrong; field numbers are wrong;
they cannot get hold of anybody. I have yet to meet a farmer who
has had a meeting with an RPA representative. I will check with
my farmers, but I do not think I have ever come across a case
where somebody has come to visit. That is so in the case of TB
testing but that is different. I do not recognise anything you
have just said. I have total sympathy for the Ombudsman. I do
not think you get it; I do not think you are fit for purpose.
Your computer system cost £130 million. It was said by the
NAO politely to be very expensive and that "heavy customisation
of the IT systems has resulted in very complex software which
is expensive to modify and maintain, and has increased the risk
of obsolescence . . .The involvement of Agency staff in the original
implementation of the system blurred responsibilities with its
contractors . . ." This is endemic failure. Very famously
John Reid once said that the department was not fit for purpose.
I have total sympathy for what we are talking about here. To be
quite frank with you, I just do not think you are up to it.
Chairman: I do not want to go too wide.
Mr Liddell-Grainger: Chairman, the Ombudsman
cannot get the message through. I am trying to get the message
through from the consumer.
Q59 Chairman: You are right to say
what you have said and I want to hear the answer, but I say to
the Committee that generally we do not want to go too wide.
Dame Helen Ghosh: Mr Liddell-Grainger
will have heard this. Over the past four years that I have been
in the department we have worked incredibly hard to improve the
service to farmers provided by the RPA, but as I have described
in a number of Select Committees the starting point was a pretty
low one. The SPS dynamic hybrid system was highly complex and
made it extremely difficult to deliver and the agency that did
not understand the delivery problems it faced. An IT system was
then built which was not, to use your phrase, fit for purpose
because it was designed to complete one set of tasks and then
there was another lot of tasks. You could not identify a customer
case. That led to all the problems described very well in the
report. That is what we have been working to put right but because
we started from that point we have had to spend a lot of money
on the computer system. That is why it has taken an awfully long
time to get the trust of farmers. We are absolutely sensitive
to the continuing concerns of farmers, but the fact is that 80%
of them were paid on the first two days of the payment window
in December of this year. As to maps, I do not want to go into
too much detail but we have put off and put off a European requirement
in order not to disrupt service to farmers. We piloted it and
had initial problems, but I believe that now things are going
pretty well.
Mr Cooper: Of the 23,000 confirming
maps we have sent out we had had 250 come back with changes and
not all of those changes are because of something the RPA has
done but because, obviously, farmers' land changes and they need
to report those differences to us. They know that and do it each
year.
Q60 Mr Liddell-Grainger: It now costs
£1,743 to administer a claim and it has gone up by 22%. The
cost per claim in Scotland is £285. There is a big differential.
The staff costs are 41% of the total claims and the IT administrative
costs have gone up by £3.7 million. Other increases are as
much as £8.8 million. You are spending more and more money
and the return to the farmers is not forthcoming. Are you going
to be fined by Europe again? Do you pay bonuses to your people?
Dame Helen Ghosh: As I have discussed
with the PAC on more than one occasion, the fundamental reason
why it costs us more to administer it is that we picked a very
complicated system. In Scotland they paid simply on an historic
basis. On policy grounds ministers decided that simply to pay
for ever into the future on the basis of a snapshot of those farmers
who happened to be receiving subsidy in 2002 was unacceptable.
There are people receiving single payments who now live in Spain
because in Scotland they received a payment in 2002. Therefore,
they wanted to move away from the historic position into something
that essentially was based on land. That is the fundamental reason
for the difference in cost. One must add to that the fact we had
to reinvest in the IT system. The RPA is costing us less and less
year on year; it has 900 fewer staff although only half of them
work on SPS anyway, and its budget will have gone down from £228
million in 2005-06 to £179 million next year, so we are driving
efficiency. We do not yet know whether or what we will have to
pay in terms of disallowance in relation to 2005-06 or later years.
We have made provision for disallowance in our accounts and as
the likelihood of a decision from Europe about disallowance comes
closer we shall harden that up. In terms of our estimates it is
approximately a five per cent fine for those years and two per
cent for later years because we are becoming more accurate. As
to bonuses, which is a subject that frequently arises in Parliamentary
Questions, we do pay them to staff in the RPA whether or not they
work on the SPS when clearly they have achieved improved service
to farmers and hit their performance targets. I think that is
reflected in increasingly good performance in terms of both accuracy
and speed of payment.
Q61 Kelvin Hopkins: Not to let your
department off the hook at all, there are fingerprints of the
Treasury and possibly Downing Street all over this. You may have
been set up to say niet and stonewall because the Government
does not want to get into a compensatory culture.
Dame Helen Ghosh: It is absolutely
not the case that we have been instructed either by Number 10
or the Cabinet Office. I was simply answering the Chairman's point.
Because it was a significant point of principle for a number of
government departments we did what we obviously would have to
do in these cases and took advice.
Q62 Kelvin Hopkins: I entirely accept
what you say, but the Government has wriggled over compensating
occupational pensioners who lost out; it is still wriggling on
Equitable Life, and there is a suspicion that it might be wriggling
on this as well. It strikes me that the problem arose because
of the decision to choose that particular complex system of single
payments under the Common Agricultural Policy. Was that decision
made under pressure from the Treasury because it would be cheaper,
or was it a wise decision by your department, because if a simpler
model like that in operation in many other Member States of the
European Union had been chosen you would not have got into this
mess?
Dame Helen Ghosh: Again, I was
not around at the time but my understanding having talked to officials
in the department who were there at the time is that it was not
something the Treasury forced upon us. It was a principled point.
We needed to move away from the old world where subsidy was based
on how much you produced and the days of the milk lake, wheat
mountain and so on. We certainly did not want subsidies based
on production. If we had carried on paying everybody on an historic
basis essentially that would have been a production link. More
importantly, we wanted to move people into a space where we paid
subsidy to a broader group of people in relation to the land,
that is, a so-called decoupled system. It was a fundamental principle
of Defra and government policy. I do not think cheapness came
into it; it was a matter of how to share out a particular cake.
Q63 Kelvin Hopkins: I accept what
you say. I appreciate we have moved away from the old CAP, speaking
as someone who opposed it from the outset. Given that there was
a move away from the previous system there were options. This
particular option was the most complex and led to your problems.
Dame Helen Ghosh: As I have discussed
with a number of previous committees, that is absolutely true,
and setting a very tight timetable to bring it in and move through
the dynamic process towards predominantly a land-based calculation
and away from historic was also a factor. But we come back to
the fact that at the time the agency on the advice it gave to
ministers did not understand the complexity and challenge of that
approach.
Q64 Kelvin Hopkins: Would it not
now be simpler to accept the Ombudsman's report, pay this small
amount of money and move to another system?
Dame Helen Ghosh: We have to move
with the rest of Europe. We work within the CAP system. As I told
the PAC—Lord Rooker said this closer to the time—we
thought in 2006-07 that perhaps this was too complicated and we
should scrap it and go for the historic system as well, but the
cost, complexity and impact on farmers as a result would have
been even greater. It is not that we did not think about it. The
next CAP reform, although discussions will take place later this
year, happens in 2013. That is the opportunity. At the moment
what we are doing is making sure we can continue to improve our
service, completely focusing on the fact that when we have the
EU budget and CAP discussions for 2013 we produce a system that
is deliverable and can give a much better service to constituents
of members of this Committee.
Q65 Mr Walker: Defra's name changes
so often. Who is driving this?
Dame Helen Ghosh: It has not changed
for eight or nine years.
Q66 Mr Walker: Are you or your minister
driving this?
Dame Helen Ghosh: Do you mean
our response to this report?
Q67 Mr Walker: Yes.
Dame Helen Ghosh: It is I hope
absolutely textbook stuff in terms of the interests of this Committee.
My team who had the day-to-day contact and Mr Cooper's team with
the Ombudsman discussed it with lawyers and other departments
and put up advice through me. Obviously, there are particular
accounting officer issues here. I discussed them with the Secretary
of State, Hilary Benn. We agreed what approach we would wish to
take. He consulted his colleagues and the response you got was
absolutely agreed. Nobody is driving anybody.
Q68 Mr Walker: Do you think it would
have been helpful to have the minister here today? You have had
quite a lot of flak not just today but during appearances before
other Select Committees. Did we not invite the minister or did
he not want to come?
Dame Helen Ghosh: I do not think
you invited him.
Q69 Chairman: We thought the permanent
secretary was the appropriate person to ask.
Dame Helen Ghosh: Hilary Benn
would not say anything different from what I am saying. As is
amply explained in the report, ministers have made all sorts of
appearances before Select Committees, have made lots of public
statements on the problems of the RPA and they are committed to
improvement.
Q70 Chairman: To go back to the nuts
and bolts of it, you say that the ex gratia payment is generous
in Whitehall terms.
Dame Helen Ghosh: No; the consolatory
payment is generous.
Q71 Chairman: In the case of Mr W
the payment you offer is less than what it has cost him even to
pursue his complaint. Not only is that in defiance of all the
instructions in this area but it does not make any sense, does
it? The cost identified by him in just processing the complaint
as identified by the Ombudsman is greater than the amount you
offer.
Dame Helen Ghosh: A consolatory
payment is for worry and distress; it is not an issue of financial
redress. There is one case involving the failure by the Child
Benefit Office to identify someone eligible for benefit. Several
years' payments were missed. It was absolutely clear cut: there
was a failure to identify the individual who lost the child benefit;
there was a statutory obligation. The individual was given the
sum of £34,000 for lost benefits including interest and a
consolatory payment of £500 for delay and stress. The consolatory
payment is not supposed to cover cost; it is about worry and stress.
Q72 Chairman: The implication of
that is that you are not compensating for the cost of pursuing
the complaint at all?
Dame Helen Ghosh: No; it is not
one of the elements of the calculation.
Q73 Chairman: All the guidance to
you about making payments says that you should compensate for
the costs incurred by people who pursue complaints.
Dame Helen Ghosh: In that case
there was a consolatory payment of £500 for delay and stress.
There was a consolatory payment of £1,000 for distress and
worry in resolving a complaint in relation to the gentleman who
died. In a sense this is beyond our remit. I do not know the basis
on which consolatory payments as opposed to financial redress
are calculated.
Q74 Chairman: The Treasury guidance
says: "Whether the process of making the complaint has imposed
costs on the person complaining, eg lost earnings or costs of
pursuing the complaint, is among the factors public bodies should
take into account when deciding financial compensation."
This illustrates the charge that the department is not quite getting
it in relation to making payments.
Dame Helen Ghosh: If the charges
is that consolatory payments are not high enough I would want
to check with other departments why they pay similar or lower
sums for worry and stress. That is quite a separate issue from
financial redress.
Q75 Chairman: The argument is that
you should really be offering an ex gratia payment here.
Dame Helen Ghosh: That is precisely
the point. The issue is not about a consolatory payment but an
ex gratia payment.
Q76 Chairman: That is what we would
like you to reflect on further. You have already had enough grief
on this issue.
Dame Helen Ghosh: That is my job.
Q77 Chairman: But our job is not
just to give people more grief, although sometimes it feels that
way. If I may speak for the Committee, we do not know much about
Defra but we know quite a lot about the Ombudsman. We believe
that you do not quite understand what the whole Ombudsman system
and principles are; if you did you would not have got yourself
into this difficulty. I think you should go away and have further
discussions. It is clear from the exchanges today that there is
a complete misunderstanding about what you think is at issue here.
That at least should be resolved not just for this case but more
generally. I would urge you to do that.
Dame Helen Ghosh: I would be very
happy to do it. I think this particular case in the sense that
it is confusing and confused has had an unfortunate conception
and birth. We started in one place and have not quite moved away
from it in the final report. I do not want the Committee to go
away with the belief that this is representative of our relationships
with the Ombudsman and this report as well as others. We have
examples of good relationships and appropriate remedies as in
the case I described earlier. We are at risk of focusing on just
this one thing.
Q78 Chairman: I believe the Ombudsman
would like a further word.
Ms Abraham: I shall try to keep
it brief. To be honest, I have found the whole experience a bit
surreal, even more so in the case of the last comment. I would
welcome a very different dialogue from the one we have had and
are having at the moment with Defra and RPA. I make one comment
on the payment of £500 for stress and worry. The Committee
will be aware that my principles do not use the language of government,
but we all understand the terminology we have been using today.
If one looks at what is acceptable in the circumstances I find
it strange that what other government departments have done is
the comparator rather than what the Ombudsman has done in similar
circumstances. I have recently secured a compensation payment
for stress and worry of £10,000 from another government department.
That in itself is odd. What I find fundamentally bewildering is
that for a long time I have been trying to understand why Defra
has been digging in on something that seems to me to be completely
disproportionate. Here there are 24 cases involving modest sums
of money. What I take away from this morning is that all of this
cross-government dialogue and taking of positions on principle
is that they are digging in on a point of principle that is based
on a misreading of the report. That is where I am at the moment.
I think they do not get it. My thinking is that there has been
all this dialogue with lawyers and other departments but if somebody
had talked to me we might not be here.
Q79 Chairman: Before we lose the
point, in a nutshell tell us again what you believe is the basis
for saying they do not get it.
Ms Abraham: Chairman, I refer
to the bit of my report that you said at one point you might read
out, that is, the summary of the finding of maladministration
in general terms and the maladministration in relation to the
two individuals and the injustice to which it led. I do not take
from that any suggestion that there is something predicated on
the targets being met. That is not what the report says. I am
beginning to wonder whether Defra has properly read the report
because I do not believe you can get from this report to the place
Dame Helen has reached, but the department has got there and is
hanging in there. I do not see it in the way they do. It is important
we start this dialogue because we have cases under investigation
and fundamental concerns about what I described earlier as systemic
issues. Maybe I should reiterate for clarity what I believe they
are. I said I thought there were indications of problems of service
design that got in the way of good customer service.
Dame Helen Ghosh: In the RPA?
Ms Abraham: I am talking about
the RPA. That is evidenced by the fact that even some of our complainants
say the staff are trying so hard but the systems will not let
them do it. There is some problem about system design. There is
something fundamental about complaint handling. The complaint
systems in relation to RPA are not as far as we can see fit for
purpose; they do not do the job which a good complaints system
would do. They do not deliver good decisions or redress mechanisms.
In there is the point about Defra not getting it. We want to talk
about good administration, decision-making and customer service;
the department wants to talk about points of law and issues of
principle. We are at cross-purposes on this and we might get ourselves
in a better place if we try to have conversation not through lawyers.
Dame Helen Ghosh: I am very happy
to engage in that. I do not know what the formal processes are
following this and what your report consists of, but I am very
happy to commit to having precisely that dialogue with the Ombudsman.
Q80 Chairman: That would be a positive
outcome of this morning's session. We might write to you as others
have suggested there is some need for that.
Mr Cooper: On behalf of the RPA
I am also very happy to meet whoever you would like us to meet
on both areas and the complaints system. I say to Mr Liddell-Grainger
that if he would like one of my people to come to one of the meetings
of farmers to which he referred I would be very happy to organise
it.
Chairman: On those more cheerful and
reassuring notes, thank you very much for coming along to talk
to us. We have concerns about this and I hope that as a result
of the conversations you have some of them will be allayed.
| 
