DEFRA'S Priorities and Annual Accounts

UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 466-i

House OF COMMONS

ORAL EVIDENCE TAKEN BEFORE THE

Environment, Food and Rural Affairs Committee

DEFRA’s priorities and annual accounts

Wednesday 15 September 2010

RT HON CAROLINE SPELMAN MP AND DAME HELEN GHOSH

Evidence heard in Public Questions 1 - 69

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 15 September 2010

Members present

Anne McIntosh in the Chair

George Eustice

Tom Blenkinsop

Amber Rudd

Bill Esterson

Mary Glindon

Neil Parish

Dan Rogerson

________________

Examination of Witnesses

Witnesses: Rt Hon Caroline Spelman MP, Secretary of State, and Dame Helen Ghosh, Permanent Secretary, Department for Environment, Food and Rural Affairs, gave evidence.

Q1 Chair: Good afternoon ladies and gentlemen. May I give a special welcome to the Secretary of State on her first visit to the Committee? You’re most welcome. And if I just ask you to introduce the Permanent Secretary and yourself, for the record?

Mrs Spelman: With pleasure, absolutely. Thank you very much to the Select Committee for inviting us. I’m glad we’ve been able to organise the first meeting of this kind relatively swiftly, given the recess. The short return of Parliament in the September Session has created that opportunity, so thank you very much for thinking to invite us early on in my tenure. I’m sure that to established former Select Committee members, Dame Helen will be a familiar face, but for new Committee Members, it is my pleasure to introduce the Permanent Secretary, Dame Helen Ghosh. I certainly have been very grateful for Dame Helen’s experience as the most senior civil servant in this Department during what had been quite a challenging first four months in post.

I wonder if, just at the outset, I could just mention one thing? In addition to all of her other responsibilities, Dame Helen is the most senior civil servant organising the visit of the Pope who, as I’m sure Committee Members will realise, is shortly to arrive in Edinburgh. Dame Helen has to go to Edinburgh this evening, so I am rather hoping, with leave of the Committee, that she may have the opportunity to catch her flight in time.

Dame Helen Ghosh: A train, I hasten to add-not a flight.

Mrs Spelman: A train, a green solution-why should I think she would go any other way? She would really need to do that by 5.30 at the, very latest. If that was at all possible to facilitate, she would be very grateful.

It was a great honour, following the formation of the coalition Government in May, to accept the post of Secretary of State for Environment, Food and Rural Affairs. As I told staff in DEFRA on the very first day of my job, my past experiences in agriculture and the environmental sector over the last 25 years including the National Farmers Union as Sugar Beet Secretary and at the Confédération Internationale des Betteraviers Européenne as Assistant Director, and then again as a fellow at the Centre of European Agricultural Studies at Wye College, London University, I felt that in some sense I was coming home in this subject area. I did very briefly do the DEFRA brief in 2003 for four months, which hon. Members will realise is just about time to get one’s head around the brief, but a lot has changed since 2003, although some things remain the same.

I have been tremendously impressed with the professionalism in the Department, in particular in bringing myself and my ministerial team up to speed with the diverse portfolio that DEFRA covers. In dealing with the immediate and difficult task of contributing to the reduction of the deficit, a key priority for me going forward is to focus on delivering the priorities set out in our structural reform plan, which I imagine all Committee Members will have seen. The plan clearly states our three priorities -

Chair: Secretary of State, I am so sorry. What I would like to do is proceed to questions and I’m sure most of your statement will be covered. We’ve got such a large area to cover.

Mrs Spelman: I understand that. I will just bring these opening remarks to a close, because there is one important thing that I need to say. I assume, as I said, that you’ve seen the structural reform plan with the three priorities that are set out. There is one thing that I do need to make very clear to the Select Committee, and which I’m sure is absolutely identical across all Departments. The Prime Minister attaches importance to reducing the budget deficit of Departments. It is the Government’s number one priority. We are still at the point of negotiations between Government Departments and the Treasury and, as Committee members will be aware, the outcome of these will be made public on 20 October. I’m therefore not in a position to discuss details of the spending review. That was really the last point I wished to make.

Q2 Chair: That’s very helpful. We will exceptionally try and finish by 6 pm to enable the Permanent Secretary to carry on with her duties. I’m joking-I’m sure we won’t go that long. Thank you, Secretary of State. I realise we can’t ask detailed questions, but we would be interested to know the direction of travel that you’re going in. What principles guided you when you prepared and submitted your spending review to the Treasury?

Mrs Spelman : I can certainly share the principles, because these are common across Government, and are as far as possible, to protect the front line by seeking savings in the back office, as far as possible through efficiency savings. The Department, I think, has been quite prudent in making preparations for a time. Whoever was going to form the next Government, reductions were going to have to be made in expenditure, so the principles are those that guide all Departments in this exercise.

Q3 Chair: Thank you. What objectives did you have in mind when preparing your submissions to the Treasury beyond the fact that you wish to reduce the deficit and save money?

Mrs Spelman: It’s the same principle that’s at stake. Obviously, the objective set by the Treasury and given to every Secretary of State was to find savings in what constitutes an unprotected Department of between 25% and 40%. Members will be familiar with the Departments that have protected concessions in terms of their spending reductions, but DEFRA is not one of the protected Departments. Our objective within that was, as far as possible, to protect the front line of what the Department does.

The Prime Minister paid a visit to the Department when we launched our structural reform plan, in which he quite spontaneously with no prompting referred to the Department as the Government’s fourth emergency service, in recognition I think of the fact that he himself experienced flooding in the Witney constituency. I think that it is quite helpful for all of us to remind ourselves that that is what DEFRA does. It deals with flooding. It deals with animal and plant health and diseases, any risk to the environment-radiological leaks, chemical spills-so our resilience was very important for me to protect as our objective.

Q4 Chair: Just on flooding, which is one of the largest areas of expenditure, what mechanisms are you looking at to improve the efficient delivery of flood and coastal erosion defence?

Mrs Spelman: First of all, I would like to acknowledge that, in chairing this Committee, Chairman, you bring very considerable expertise in the subject area of flooding and, I would be the first to acknowledge, probably a greater understanding of this subject certainly than myself and probably many Members in the room. I anticipated that you would be particularly interested in our approach to the protection of flood defences and to the management of flood risk. The truth of the matter is there is never enough money to deal with flooding, and Cockermouth and Boscastle just remind us how unpredictable these events can be.

Therefore, it was very important to me to try and protect this important area of our work, but also to look at ways in which I could work together with the Environment Agency to find efficiencies, so that more of the resource could be devoted to the front line. Hard evidence of the Environment Agency’s capacity to do that can be drawn from this financial year’s exercise, where the Environment Agency, in common with our arm’s length bodies, was asked to share the proportionate reduction in our spending of 5%, but still managed to protect more homes than anticipated. Expenditure on flood risk and flood defences is at a record level in this financial year, so I think it does demonstrate that, by identifying efficiencies, it is possible to maintain the front line of our flood defences.

Q5 Chair: If you are looking at models, what models have you chosen for increasing private or local contributions to the costs? What models are you looking at for increasing the private and the public funding aspects? My concern is that it’s the same people paying all the time. They’re either council tax payers or water company customers, so we would just be interested to know what models you’re looking at.

Mrs Spelman : The first point to make is that flooding is the largest element of the Department’s expenditure, so the state, directly from the centre, is the largest provider of resource to protect individuals, their property, businesses, and our communities from the risk of flooding. What I did over the summer recess was carefully read, learn and inwardly digest all the work that had been commissioned by the previous Government in the whole subject area of flooding and water management. I’m sure Committee Members are familiar with the three reviews-Pitt, Cave and Walker-and quite substantial reading matter they are. It’s important that the incoming Government gain as much as they can from the publicly funded reviews that were produced by experts in these areas, but we shall be seeking ways, in addition, to provide extra protection to those who are threatened with flood risk.

We will continue to explore that, and legislation which is commencing now-the Flood and Water Management Act 2010-gives expression to a number of recommendations that Pitt made for improving our flood defences and involving local communities more in the ways that we do that, identifying the important role local authorities have in helping to protect their communities from flooding. The models that were outlined in the reviews that we looked at have all been given consideration. I don’t know whether Dame Helen would like to add anything.

Dame Helen Ghosh: I can’t remember whether it’s actually today, but I know that Lord Henley, for example, has been active. The message is that ministers are out there trying to look at the various models that might be possible. Lord Henley is having a meeting, I think this week, with the financial side, with the ABI and others, to think of more imaginative ways of getting in private funding. Of course, the other significant funding that we get from the private sector is through the insurance industry, so he has been talking to those people. Richard Benyon has been out, I think the week before last, on the east coast talking to communities and local authorities, looking for himself at the issues around coastal defence. I think he came back both very seized with the fact that it’s immensely significant to communities, but also that local authorities were working with local communities very much in a big society kind of way, to think of imaginative solutions. I think there is a lot of fact finding going on at the moment to support what the Secretary of State said.

Q6 Chair: Can I just give one example that I’m concerned about?

We all agree that private sewers and lateral drains should perhaps best be placed with water companies, but this is going to be a big charge on them. As far as I understand, we still don’t know the length of pipe and drains involved, so how can we, outside the price review, actually offload this responsibility onto the water company, if we don’t know what the level of cost is going to be?

Mrs Spelman: Well, there are a couple of things. I think, Chairman, that you are going to participate in the Flood Forum, which Mr Benyon has organised for later this week. This is one of the things that can be discussed, but if I just take my own constituency, a number of my constituents are simply unable to afford to pay when the private sewer fails or where there’s a failure with the drainage. The reality is either the local authority or the water company-or, in fact, both of them-end up having to deal with the consequences of a situation where the householder is not actually able to do the restoration themselves.

The decision to address this problem was taken in the full knowledge that it presents a cost and a cost that would be far better managed. But this is a matter that you could take up in discussion at the Flood Forum later this week. It’s a specific aspect of what we do in terms of flood and water management, but it’s an important one. I think my constituents would seriously welcome because, in my surgery, I have met people facing tens of thousands of pounds-worth of damage that they do not have the resource to resolve.

Chair: A flood of questions. Mr Parish first.

Q7 Neil Parish: Yes, welcome the Secretary of State. On the inland rivers where, as you know, very often in recent years we have allowed them to silt up very much, there’s sometimes a conflict between conservation on keeping water levels high and then not having the necessary drainage when the time comes. Are you reviewing that, because I think we need sluices to contain water levels, but you need to keep the rivers free so that they can actually drain properly? I think that’s one of the problems we’ve seen in recent years.

Mrs Spelman: : There are two important reviews-or, in fact, consultative exercises-that are going to take place in the near term. I’m sure Committee members are familiar with the fact that a natural environment White Paper was launched by the Department in July and which in its widest sense deals with natural resources, including water. The management of water resource through inland waterways is part of that consultation, so it is very important that all participants take the opportunity of the consultation to feed in their view about how we might approach this in future. Later, we will launch a water White Paper where we look specifically at the management of water resources, at the way the industry is structured, and at the cost of water to consumers. Again, I have encouraged the water industry and all other consultees actively to participate in that. The terms of reference for the water White Paper are being consulted on at present, so there is an opportunity in the scope of the terms of reference for you to suggest that dredging is an aspect that should be considered as part of the water White Paper.

Chair: There’s just a point I would briefly raise. Under the last Government, the level for spending on maintenance went down considerably, because that was the strategy of the then Government. For every £1 spent on maintenance, £8 were spent on capital expenditure. Are you giving a commitment that that will be reviewed? Is the Permanent Secretary shaking her head?

Dame Helen Ghosh: No, no, sorry. Clearly, when we have a settlement, the issues of the balance between maintenance and new activity investment is something that is very much part of the discussions that we are having with the Treasury. Precisely how that comes out and what that means for the activity of the Environment Agency and local communities is something we will be able to establish when we have a spending settlement.

Mrs Spelman : You did raise this question specifically, I think, in the House yesterday. The Department has done some work to provide you with a response to this question. The majority of capital expenditure on flood defence is not for completely new defences, but it is used to refurbish existing structures. Only 10 to 15% of capital expenditure historically has been spent on brand new defences where none existed before. In 2010-11, the Environment Agency maintenance budgets are £125 million compared to capital spend on asset management of £305 million.

Chair: Thank you.

Q8 Bill Esterson: A couple of questions. What in your opinion is the right balance between investment in flood defence and the risk of expensive clearup, not to say risk to life?

Mrs Spelman : Mr Esterson, it entirely depends on the case. The nature of flooding varies hugely. There is surface water flooding; coastal erosion can cause flooding; and there is river flooding. It entirely depends on the nature of the flooding, and I don’t think one can have a onesizefitsall answer to that question. In the answer I just gave, I think it does show proportionately the Environment Agency actually spending more money on maintaining existing defences than on brand new defences. So in proportion terms, it’s maintaining what we have and making sure that it is resilient to cope with predictable and unpredictable flooding events. It depends on the event.

Q9 Bill Esterson: So it’s that sort of issue that we’d expect to see in the White Paper?

Mrs Spelman : The White Paper is a consultation paper at the moment, so if you would like to see it in the White Paper, I think you have a golden opportunity during the consultation period to say that you would like more discussion about the balance of the way money is spent. I have given the Committee some facts-hard evidence-about the balance that was given expression in the budget of the Environment Agency last year. That’s a global figure, but the nature of each flooding event or episode, may require a different proportion to be spent.

Dame Helen Ghosh: The Chairman is very much aware-and we have had some of these debates previously in Committee-of the question. Clearly, when we are discussing investment with the Environment Agency or, indeed, with the Treasury, whether in maintenance of existing defences or in new defences, there is a complicated formula in terms of the value for money formula, and there are always debates about what one should protect, whether it’s economic activity or households. I know the Committee has raised before the extent to which weight should be given to defending agricultural land, for example. So that is a debate one has in deciding where the investment goes. Again, if you have any particular comments on the formula that is used to calculate the value for money of any particular investment, that would be very helpful. Across the piece, it has been shown for investment in most of the activity that the Environment Agency fulfils, the economic return is extremely good. It’s a very powerful argument in terms of spending.

Q10 Bill Esterson: One more question on this issue. Highways and bridge maintenance were something that was clearly an issue with the Cumbria flooding: the poor state of repair of many bridges, some of which were washed away. The Transport Committee made reference to this in its recent inquiry in the last Parliament about the way that local authorities channel their budgets into highways maintenance and neglect bridge repair. Is this something that you would consider looking into, especially given the recent evidence of the poor state of repair?

Mrs Spelman : The Highways Agency reports to the Department of Transport, so it is really for the Secretary of State for Transport to address this question. If we receive information from our own agencies that there is a risk of increased flooding through a poor record of maintenance, that is the point at which we get involved. We all know the pressures that local government is under and, having shadowed that brief for the last six years, I was very aware of it. All too often, I’m afraid, it’s the highways maintenance budget that takes the strain when there are pressures above inflation pressures in other areas. Certainly, if we were alerted to an increased flood risk, we would use that information to alert that local authority to what we saw as a serious risk.

Q11 George Eustice: Just quickly, there’s a lot of money going into new investment in flood defences. Quite a lot of that is based on projections or assumptions about rising sea levels and changing weather patterns. It’s quite important those are right and that we’re confident that they’re right, given the money going in. I wonder if you can say a bit about what those assumptions are in a nutshell, and how often you review them or revisit them.

Mrs Spelman : We take them very seriously, because the underlying implications of a rise in sea levels of 30 centimetres by 2050 is very significant, and we have to plan for that. We have to plan right across Government for that, not just DEFRA. The government’s Chief Scientist has warned us that, by 2030, we face serious risks of what he calls "a perfect storm". I’ve already said DEFRA’s an emergency Department, but we need to plan for the predictable fact that there will be an increased frequency of severe weather events. That is one reason why I have sought in the departmental strategy to ensure that our flood defences are maintained, optimised and improved as part of increased resilience.

One of the good things about capital expenditure on flood defence is it does produce a very good return on expenditure. This is of great importance to the homes at risk of flooding, and there is a predictability, I’m afraid, both in the rise of the water table and in the increasing frequency of severe weather events that means that we have to elevate it to this level of priority. The difficulty for all of us is to know where an extreme event will take place and what form it will take. Being caught unawares by the severity of the rainfall in Cumbria or Boscastle are prime examples of the difficulty of trying to address the unpredictable nature of these events.

Dame Helen Ghosh: Of course, we did take action-and the Chairman will be particularly familiar with this-in the light of the Pitt recommendations to set up our new flood prediction unit.

Chair: Flood forecasting unit, I think.

Dame Helen Ghosh: I’ve not quite got the terminology right. In fact, in the case of Cumbria, it was predicted that there would be a flood, but it was a very small variation in where the pattern was in terms of the watershed that meant that the impact was on Cockermouth. We were almost right but, at that fine degree of geographical variation, it was bound to be, in that sense, unpredictable.

Mrs Spelman : We are working closely with DCLG, because the surface water flooding episode in July 2007, which I’m sure everybody in the room remembers, means that there’s quite a lot that can be done at the local level to improve the resilience of communities to cope with an extreme weather event of that kind. That is something we are doing with DCLG and, indeed, Mr Benyon has been in consultation with Mr Neill at DCLG in order to look at how we can work with local authorities to address the issue, specifically of surface water flooding, because it relates to planning and housing development.

Q12 Mrs Glindon: You keep referring to local authorities and to the local aspect of prevention and management. My particular concern is that the Spending Review will not just affect Government but local government. What role do you see local government playing, as you develop the plans with budgets that will be greatly reduced on highways and so on? My concern is about putting an emphasis on local government-to what degree can you expect them to be involved? With their cuts, how can they manage and help in this particular role?

Mrs Spelman : They are very actively involved. The Pitt Review sees a leading role for local authorities in this area. DEFRA has recognised that and has, if I recall the figure correctly, made £2 million available to lead local authorities so that they can try and address the lessons that Pitt recommended local government should. So we’ve recognised from the Department at the centre that local authorities need some resource in order to help improve their own resilience. The primary agency-the Environment Agency-is under our auspices, and provides advice to local authorities in order to be able to inform the decisions it makes on how to use its resources, particularly in respect of planning. It may choose to ignore that advice, but we ensure as a Department through that agency that they have the best possible advice available. In terms of the allocation of resource to local authorities to assist them with resilience to flood risk, it is done in proportion to the number of homes that are likely to be affected, so we do have an objective way in which to try and make sure that the resources do come to the local authorities most likely to be affected.

Q13 Chair: Thank you. I would like to take up the Permanent Secretary’s offer of looking at the relative costs and how we reach a decision on the physical defences of a wall as opposed to storing the water on the land, but we can revert to that through our flooding inquiry.

Dame Helen Ghosh: Yes, indeed, the funding formula. I’m sure we’d be happy to arrange a session with Members and the Environment Agency to talk through how that’s done.

Q14 Chair: That would be very, very helpful.

Secretary of State, you’re very keen to make sure that frontline services are protected. I have a particular concern that most of the funding of the Department is linked to CAP or CFP EU funds. Do you share my concern that with the Regional Development Agencies going, there is going to be a potential gap in how you approach EU funding, whichever body is responsible? What I’m hearing from local farmers and businesses who have received ERDF money in particular is that the Commission may not recognise local enterprise partnerships? This is obviously a recent development? How do you view that?

Mrs Spelman : There are a couple of things on this. It is an incredibly important point to make and I’m sure one that this Committee understands, but it allows me to make that point that, in the savings that Government has to make as part of this budget deficit reduction, we must remember that the industry that manages most of the land is, in fact, largely protected because its income derived through the CAP is not part of the spending review. It must be one of the only industrial sectors in the economy that does have that continuity in terms of its income stream.

As regards the distribution amounts that previously came through the Regional Development Agencies, the Department will ensure that there isn’t disruption to the distribution of that money. There is more than one alternative way of distributing it. It can, of course, be distributed from the centre. We are always looking for a decentralised solution, but if European requirements are such that the local enterprise partnerships cannot be acknowledged as the correct vehicle, we still have other means by which we can ensure that the money is distributed in a satisfactory way.

Q15 Chair: And the match funding will be secure?

Mrs Spelman : The match funding is part of the comprehensive spending review, and I’m not able to go into details on the comprehensive spending review, as I indicated earlier.

Q16 Chair: Secretary of State, are you concerned that the Comptroller and Auditor General, for two years running-2008-09, and 2009-10-disallowed parts of the Department’s budget relating to the Rural Payments Agency?

Mrs Spelman : Of course I’m concerned, but it does largely pertain to a period in which I wasn’t in office. I think probably the Permanent Secretary could speak to those years.

Dame Helen Ghosh: Yes, certainly. I think what the Chairman is referring to is the fact that we have had qualifications on the Department’s accounts in two years for slightly different reasons. The year before last-2008-09-we had a qualification that related to payment of EU disallowance in relation to the SPS scheme.

This year, we have had a similar qualification in relation to payment of disallowance. That crystallised-we had to pay disallowance for 2005 and 2006, SPS and some historic schemes-as a result of the fact that thanks to work to clarify the position on overpayments and, indeed, underpayments to farmers in the very difficult early years of the single payment in 2005 and 2006, we had a level of outstanding debt which was material. It was still felt that there was uncertainty about what that level was, so we got a thing that technically called "a limitation of scope". The review we set up of the Rural Payments Agency last summer- indeed the financial work that we’ve been doing since then to improve the accounting arrangements at the RPA-meant that a qualification that we and the RPA had previously suffered in relation to how we account for foreign exchange was removed. The improvements had removed one qualification, but we still had qualifications in the other two areas.

The NAO acknowledges that the financial management at the RPA is now considerably better and will continue to improve under the new arrangements that we’ve set up. We have made allowances in our accounts. The provision that we have made is for what we might call a more regular level of disallowance of around 2%, which is historically about the level that we expected under the old schemes. So although it’s slightly touching wood, we are not expecting the kind of high levels of disallowance that we got in relation to the 2005 scheme to occur again.

Mrs Spelman: I would like to demonstrate to the Committee that the ministerial team does take this very seriously. Not only are we concerned but we have done something about it. The Minister of State himself has made a decision to get involved in the Rural Payments Agency by actually chairing the board.

Dame Helen Ghosh: It’s the supervisory board.

Mrs Spelman: Indeed. There are still some outstanding challenges within the agency, of which this is one. The Minister of State has personally said he will take on that responsibility, and I mention that to demonstrate to the Committee how seriously we take it.

Q17 Chair: Two supplementaries. We can’t predict, presumably, the level of fines going forward, so is there provision in the budget?

Dame Helen Ghosh: As you know, Chairman, as will Mr Parish in particular, the wheels of the EU auditors grind fantastically slowly, so what you will see moving through our accounts is a series of provisions, which then crystallise into an actual payment. So for example, in 2009-10, at last, after much negotiation with the Commission, we had to pay £160 million, which was a 5% fine for 2005 and a 2% fine for 2006. We have to make provision in our accounts, not knowing when it might crystallise and actually not trying to draw the Commission’s attention to it, because they might think, "Well, they’ve made that provision. I’ll take the money, thank you very much."

We have to make provision, agreed with the Treasury, on the basis of our best estimate on the likely inaccuracies in the scheme that year. The agreement that we have got in formal discussions with the Commission, and in discussion with the Treasury, is that, going forward, making a provision of about 2%, which is as I say what we made before my time for the old intervention systems, is probably now about right. There had been a level of inaccuracy. Again, as you know, we had immediate fines in the first year for late payment, but now we are nowhere near late payment fines. The cleaner and cleaner our data gets as a result of the work we’re doing with the agency, the more and more accurate our payments are likely to be, so we think, touch wood, we’re probably at a level of about 2%, which is what one might regard as normality.

Q18 Chair: You were criticised for having a heavy reliance on interim staff at the RPA; has that been addressed? Improvements were required in contract management and commercial skills; has that also been addressed?

Dame Helen Ghosh: In relation to the agency, yes, we have taken action. You will probably be aware that Tony Cooper has now retired, and we have advertised for a new Chief Executive to carry forward the work of the review at a more senior civil service level to ensure that we can attract the very best candidates, whether from the public or the private sector. When that person is in the post, which we expect to be in the next couple of months, they will have freedom to appoint a new Chief Operating Officer, which was also an interim post, and a new Chief Finance Officer as a permanent post. We have had to use, in order to deal with the challenges that faced us, quite a lot of consultancy activity within the agency. Deloitte in particular is helping us work through the financial aspects-the accounts stuff- which has got us to the better place we’re in, but now we’re extremely clear that this is the time we need a permanent team to carry us forward for the future.

Q19 Chair: On the ground, the claims of local farmers are often processed by interim staff. On one occasion, it was reported to be sixth formers doing it as a holiday job, so we just want reassurance that that’s not happening.

Dame Helen Ghosh: I can’t give assurance about particular instances. It will always be the case in any agency-and I know this is true across other Departments I’ve been in-that if you have peaks of work you sometimes get temporary workers in to deal with them, as there are particular times of year when you need staff. It would just be uneconomic to employ the high level of staff for the whole year round. Overall, from 2005, when I first became involved in this issue, the RPA has significantly replaced interim and casual staff with permanent staff, at the same time as overall reducing the number of staff who are there. If farmers have particular concerns about how they’ve been dealt with, they should pass them on to the agency.

Mrs Spelman : What I have observed on this one is that as an increasing number of these payments are correctly undertaken and standardised, there’s a diminishing number of anomalies and of unusual payments. There are more specialist staff, so the number of staff required to deal with the anomalies is diminishing over time. So while I’m sure that, in the beginning, when there were a lot of problems with the payments, the shortterm solution involved interim staff. It becomes easier over time as the number of anomalies diminishes to use staff who are core to the Department. The Committee did submitted a written question to me about whether or not extra financial resources were required to be allocated to this agency to deal with its problems. In my written reply, I pointed out that the cost of operating the RPA had fallen by 23% since 2007-08, which is a function of the reducing number of problems that it faces. The direction of travel is a diminution in cost and a diminution in the volume of shortterm staff required.

Q20 Chair: Presumably, all these issues will be in the business plan.

Mrs Spelman : Absolutely, and being dealt with by the Minister of State, no less.

Q21 Chair: And when do you expect to publish the business plan?

Mrs Spelman : The business plans by Departments are set following the comprehensive spending review. Until that review is made public and the resources are decided, the plan and the resources can’t be put together. It will follow on at a date determined across government.

Q22 George Eustice: I wanted to come back to the point raised about local enterprise partnerships. In know that in Cornwall, for instance, there’s a very strong desire to take responsibility for administering the RDPE fund for rural development grants. Is that something that could be looked at and considered? If the EU agreed that that was okay, is that something the Department would be happy with?

Mrs Spelman : It’s certainly something I’d be prepared to raise with the Commissioner. All Members will be aware that the form that local enterprise partnerships are going to take is still being decided. I remember on a visit to Cornwall a strong case put to me for a local enterprise partnership whose boundaries were contiguous with those of the county. It’s a very large country and it’s understandable why the case has been made for that.

With the Commission, we need to be clear in explaining the transition from Regional Development Agencies to local economic partnerships, but at the moment this is in transition. It’s under the aegis of the Department for Communities and Local Government, but I’d be very happy to raise that issue with the Commissioner. We meet very frequently as an agricultural council and there is an informal agricultural council this weekend.

Q23 George Eustice: A followup, also on the RDPE. One of the complaints that comes from some rural businesses is that, although the fund is intended at a European level to, I think, encourage rural business development in quite a broad sense, apparently there’s been some additional criteria that were added by DEFRA, under the last Government which gave it quite a narrow focus, specifically in agrienvironment schemes. I wondered if this is something that you were planning to look at again, to perhaps bring the DEFRA guidance more in line with that that comes from the European Union.

Mrs Spelman : There’s a preliminary discussion on CAP reform taking place now. It has just commenced, and I think it’s quite interesting to note that the direction of travel that’s emerging among European agricultural ministers is a recognition that taxpayers in Europe are increasingly going to expect public goods, as well as food, to be sustainably produced. I think we’re likely to see as part of the CAP reform discussion an interesting debate about what taxpayers’ money should be used on to achieve the multiple objectives of environmental protection, sustainable food production and rural development. I’m keen to participate in the discussion on rural development, but it’s at a very early stage at the moment.

Q24 Neil Parish: My pet subject is the Rural Payments Agency. I have some sympathy for the Rural Payments Agency in England, where there was a complex system of spreading of payment. The cost per farmer or per applicant was some £1,800, and in Scotland some £300, but still we didn’t get it right and we got the fine for not delivering on time. So I’m trying to get to the bottom of it-it still cost a lot of money, and yet, we still didn’t deliver and we lost £160 million in fines, which was ridiculous. The situation is improving, but there are still farmers who don’t receive their payments on time. There are still farmers for whom all the paperwork is agreed, and yet the Rural Payments Agency still can’t for several months issue the payment. These things do need to be sorted out, so are you really getting to grips with it and what is the answer? It’s still costing a lot to service an application, yet it is still not getting done on time?

Mrs Spelman: Hindsight is a wonderful thing.

Q25 Neil Parish: Absolutely, yes. Mind you, some of that wasn’t hindsight, because I commented it on the time.

Mrs Spelman : No, but some things are clearer now than they were at the time the last Government were dealing with this. Having not been part of the last Government, it is easier for me to draw conclusions that some of the mistakes that were made were the result of trying to produce a complicated, tailored IT system for all the rural payments. Actually, we know from other large IT projects that it is better to use an established robust platform to deal with straightforward cases, then focus the IT resource onto the more problematic anomalies. That would have, perhaps with hindsight, produced a better division of labour.

The Minister of State is certainly looking at the whole question of the capacity of the existing IT system to serve us well going forward. One of the difficulties for us is the interplay with the timing of CAP reform. We have to be confident, of course, in order to make good use of public money, that the CAP will continue to be paid in the same way on an acreagebased basis. That is one of the complexities that the Minister of State has to deal with but, as I think I indicated, he recognises the challenges and is undertaking a rigorous assessment of the present capacities of the Rural Payments Agency, but it is against a backdrop of some uncertainty until we know the direction of travel of the CAP for sure.

Dame Helen Ghosh: As you said Mr Parish, the cost per claim is still much too high. Some of that, as the Secretary of State was saying, is because our IT costs, which in some way are lodged within that, are much too high. Essentially, the wrong IT system was commissioned, and we have had to invest large amounts of money, despite the fact the overall budget has gone down, in trying to make it fit for purpose. I must say it’ll be a relief to all of us when we can at last ditch the old system and transfer to a new one.

I think the fundamental finding of the review which the previous Government commissioned and which this Government published was that the agency had delivered the thing that then Ministers but also many customers wanted on the whole. While accepting your point that there have been some people who have waited too long, the speed of payment to farmers was the priority. Retrospectively, I would say, as I have to other Committees, perhaps we gave too much of a premium to that and not enough of a premium early on to saying, "Actually, let’s pause. Let’s get the basic data sorted out." There was an awful lot of dirty data from the first year, so we should have said, "Let’s get the data sorted out, and let’s think about the process before we keep rushing on to the next year’s scheme." In a sense, that is what has come back to haunt the agency, but it was what customers wanted.

We have brought down the cost per claim to something more like £1,000 than the £1,700 to £1,800 cited by the NAO, but it is still too high. The review essentially said we need to do three things, including looking at the processes, which are not lean. They were different in each regional office, which is why we’re very keen to attract a Chief Operating Officer and Chief Executive with real operating experience in that kind of big system. The review also said that the leadership needed reinforcement, which we are doing, selfevidently. It said, too, that we needed to have a clearer relationship with the Department. The Department had stepped back too far, in a sense, and said, "Please get on with it." In a sense, it was not close enough to what was going on. Finally, we needed to focus on this question of the new IT.

As the Secretary of State said, although there are still lots of uncertainties about what a new CAP may look like, taking an approach that said, "Let’s build something relatively simple for the 80% of claims which are simple, then more or less take the rest of offline and use spreadsheets for the complex cases." Many of those complex cases were held up, and we have made, I’m sorry to say, late payment. We should take those cases offline, because we could do those more cheaply just working it out with a pen and paper-more or less, although not quite that. We should try to build an IT system that could cope with the person with a bit of common land on the border with a bit of this and a bit of that. That was just impossible before, and that was mistaken.

Neil Parish: Thank you for that answer.

Chair: Can I just take the opportunity to remind members of the public to keep their mobile phones switched off to avoid any potential embarrassment, because it will interfere with the sound system.

Q26 Bill Esterson: Can I ask about priorities within Government? I know you attend the European Affairs committee and the Economic Affairs committee.

Mrs Spelman: And the Home Affairs committee.

Bill Esterson: Those are important regarding your budget and the responsibilities of your Department. You might be concerned about the fact that the Secretary of State for Communities and Local Government serves on both, and clearly he has a different set of priorities. Given some of the questions the Chair was asking earlier, is there a danger that those priorities and those other Departments might be ahead of your own priorities when it comes to budget setting?

Mrs Spelman : No, not at all. The Cabinet committee system is new to me. I’ve been in opposition, but I think it’s a very good system. I’m spending quite a lot of my time in Cabinet committees. In fact, I attend three. I attend the Home Affairs committee, and the European Affairs committee and-I am sorry, I have a bit of a mental blank. It doesn’t work like the weighting that you’re describing. What the Cabinet committees do is allow Cabinet Ministers to debate together a policy prior to its launch. There was a good example of that at the Home Affairs committee today. The reason for my slight confusion is that there’s discussion about having a European affairs subcommittee for the Departments the bulk of whose time is spent on European matters. DEFRA is one of those Departments, as 80% of our time is spent on European issues.

It isn’t a question of prioritisation. It’s a question of debating policy before it goes into the public domain, so that we have Cabinet collective responsibility for a policy that’s going to be presented to the public. I find it very interesting, because even in opposition, you rarely get the chance to have that quality of input to one of your colleague’s policies before it goes public. It’s been a very rich experience, and I quite often sit next to the Secretary of State for Communities and Local Government and am able to bring my reflections on his policy, as he would bring his reflections upon mine. The Cabinet committee system, I think, has a lot to commend it.

Dame Helen Ghosh: In fact, of course, the spending review is under the auspices of the PEX committee, which is a very small group of ministers on which the Secretary of State for Local Government doesn’t sit.

Q27 Bill Esterson: It strikes me as odd, given the importance of the CAP, that you are not a full member of that Cabinet committee.

Mrs Spelman : In the Coalition arithmetic that’s a balance of Conservative and Liberal Members that affects the composition of those committees but, as I mentioned, the European Affairs Cabinet committee is going to have a subcommittee for the Departments that primarily have an EU focus, and ours must be one of the strongest cases for that.

Dame Helen Ghosh: I think it’s also worth adding that, of course, all committees invite the relevant Secretaries of State, whether or not they are members, to come when their issues are being discussed, so the Secretary of State does attend. If the CAP is being discussed or the EU budget is being discussed, of course she attends.

Mrs Spelman : There hasn’t been a European affairs Cabinet committee that I have not been at.

Dame Helen Ghosh: Yes, curiously.

Chair: Thank you.

Q28 Tom Blenkinsop: Good afternoon, Secretary of State. Can you tell us how the Department will measure its performance and its arm’s length bodies’ performance in the new regime of structural reform plans?

Mrs Spelman: Well, the structural reform plan, as I would imagine you have seen, has timelines attached to it for start and end of the activities that we commit ourselves to. That is a very good discipline for us to keep us on track in terms of delivering on the undertakings that we’ve given. The evolution of the structural reform plan was done with Minsters and senior civil servants together, so this was a plan that we worked through. We agreed realistically we could achieve our objectives by a certain outcome, and that is kept under quarterly review unless I’m much mistaken, to make sure that we remain on track.

Arm’s length bodies in turn produce their own set of objectives. For example, Natural England introduced their next set of sixmonth objectives. We reviewed their performance against their own objectives in the last six months. They use a traffic light system and we had a helpful discussion about where they want to put the priority over the next six months. Again, I will review their performance against those objectives in six months’ time.

Q29 Tom Blenkinsop: You’ve already taken some major decisions about ALBs which don’t seem to have been driven by financial savings, including the abolition of the Commission for Rural Communities, the Royal Commission on Environmental Pollution, and the Sustainable Development Commission, which saves around about £8 million a year. You’ve also abolished the Agricultural Wages Board, which has saved nothing, as evidenced from a recent parliament question. What was your rationale for making these decisions, not on the specifics of each organisation, but regarding your approach?

Mrs Spelman : The Prime Minister set three tests for arm’s length bodies and we applied those tests to the bodies that come under the aegis of DEFRA-over 90 in total. Those tests were: first, does it perform a technical function? Secondly, does it need to be politically impartial? Thirdly, does it act independently to establish the facts?

I think there were further criteria that we applied, including one of obsolescence, as some of these arm’s length bodies were established several decades ago. The Royal Commission on Environmental Protection, for example, was established in the 1970s at a time when environmental protection was quite a new concept. I don’t think anyone would dispute today that environmental protection is something that all parties regard as extremely important, and it has become mainstream to the political process. A number of our decisions were based on the fact that these things are now mainstream. The Agricultural Wages Board was set up long before legislation on the national minimum wage, which now provides protection to employees on their remuneration, which has rendered the need for a separate agricultural wages board obsolete.

There were some clear tests that we applied. We applied them in a fair way, and the result is that approximately half of our arm’s length bodies are to be abolished. We have approached this in a very transparent way. We’ve been public about the ones that we want to abolish, not least out of consideration for the employees. There’s one thing worse than knowing the sword of Damocles is hanging over you, and that is not knowing when it’s going to fall. So we’ve been very transparent, so that the employees of the arm’s length bodies that we are going to abolish know exactly where they stand and have an opportunity to seek alternative employment, and we do help our employees with redeployment.

Q30 Tom Blenkinsop: What were those three elements again, which the government applied?

Mrs Spelman: So the Prime Minister established three for arm’s length bodies, which will be used to assess whether the public body remains the right delivery mechanism. First, does it perform a technical function? Some of our arm’s length bodies have not actually produced anything in writing for a decade. Secondly, does it need to be politically impartial? We do not believe taxpayers’ money should be used by an arm’s length body as an advocate against the Government of the day. I’m sure taxpayers wouldn’t want their money used in that way. And thirdly, does it act independently to establish the facts? That, of course, is very important to us.

We’re relying on the arm’s length nature. Take, for example, a body like the Food Standards Agency, which is at arm’s length from the Department for very good reason and the purpose of which is to ensure that our food is safe to eat. That kind of independence-the independent establishment of facts-is something that we regard as important for the continued existence of that arm’s length body.

Q31 Tom Blenkinsop: If I can pick you up on that third point about the independent establishment of facts, given that the Prime Minister had declared that the Government are the greenest Government ever and you’ve abolished the independent scrutiny of policy, how are independent facts established? How can that statement be constantly checked and monitored, and proved to be the case?

Mrs Spelman: I think there are two separate things there. The independent establishment of facts is different from an opinion about policy. As regards policy formation, which was being undertaken by some of these arm’s length bodies, we believe the right place for policy formation is within the Department. So for example, in the abolition of the Commission for Rural Communities, the policymakers within CRC have come back inhouse to DEFRA. The establishment of facts is different from critiquing policy.

Q32 Tom Blenkinsop: Under the previous system of departmental strategic objectives, there were a large number of indicators which required extensive monitoring and data collection.

Mrs Spelman: Yes, there were.

Q33 Tom Blenkinsop: So will the new system require less of this type of work or more of this type of work?

Mrs Spelman: That’s a separate issue, I think. As I indicated, the arm’s length bodies which are continuing still have objectives against which we measure their performance.

Dame Helen Ghosh: Yes, I recall now frequent discussions with the previous Committee on the subject of things like farmland birds and the decline, or not, in the numbers of farmland birds. If you take that as an example, the data around that were collected by the British Trust for Ornithology and the RSPB, and that was what we used, so we never relied wholly, in all our measures-and we wouldn’t, as it were-on Government or NDPBproduced data.

I think the philosophy of this Government is clearly that we should put more and more data out there. For example, we are all putting much more spending data and salary data out there. It’s clear from things that the Chancellor has said in the past that we’re not anticipating having that very, very detailed set of detailed targets, DSAs, with lots and lots of subtargets and indicators, but that what Departments are preparing themselves to do in a transparency policy is to put lots of that kind of data out there for the public. We certainly have plenty of highly vociferous and very talented NGOs across all our fields of interest who are very ready to analyse, comment, come back and advocate. I think the transparency policy thing will replace lots of this very, very detailed targeting. We’re not expecting to have that post20 October.

Mrs Spelman: Mr Blenkinsop, you mentioned the Sustainable Development Commission, so I just want to address that one. It was established in the 1980s, but again, sustainable development is explicit or implicit in the three priorities that we have chosen for the Department in the structural reform plan. So I don’t think there’s any doubt that sustainable development has become mainstream to a Department like DEFRA.

To give reassurances to the Select Committee, I have thought of two ways in which we can help to ensure that sustainable development is achieved right across Government. The Cabinet Office has a crosscutting role in the Department, and it’s perfectly possible within the Cabinet Office structure and the committee structure to have a review of progress across Departments on a subject like sustainable development. I have also approached the Chairman of the Environmental Audit Committee, because I believe that the EAC is very wellplaced to audit the performance of individual Departments on sustainable development. She indicated an enthusiasm for the Audit Committee to undertake that function. It fits very well with the whole concept, but it is a body of the House of Parliament, so it is not something in which a Government Department can be involved. However, I believe that we will see the EAC take on that auditing role.

Q34 Tom Blenkinsop: I think you just did this area already, but your structural reform plan sets out what the Department will be doing. What will DEFRA no longer be doing and will you announce that alongside the CSR itself?

Mrs Spelman : I’m sure you will understand that until the CSR settlement is finalised we cannot make final decisions about what we stop doing, as you put it, but I am sure you’d appreciate this is something on which Ministers have to work together with civil servants, who have an understanding of the headcount in the Department, and know where there are opportunities to combine functions or to perform a function in a different way. We believe in a big society approach to what we do as far as possible. As the Permanent Secretary said, we a very large NGO community with many enthusiastic volunteers with a passion for protecting their environment, and this is where we believe that you can achieve more for less.

While our resources may be reduced because of the need to help plug the hole in the budget deficit, we actually that, in terms of our front line, we can through the big society approach achieve more even with fewer resources. As for the internal workings of the Department, that is something that has to be worked through with the managers and directors of the Departments themselves.

Chair: Thank you.

Q35 Dan Rogerson: Welcome, Secretary of State and congratulations on your role. Welcome back to the Permanent Secretary as well-proving her job title is perfectly true.

We have talked about the Commission for Rural Communities and the role that it played. I very much welcomed the work that it has done in recent years and, certainly, the royal advocate himself was a great friend to this Committee in supporting what we were doing and there was sort of crossfertilisation. While the Government are taking some tough decisions on some of these issues, with specific regard to the work that the CRC was doing, how will you ensure that there is a challenge to all Government Departments and agencies and bodies to look after rural areas and make sure that rural areas are getting a fair crack of the whip?

Mrs Spelman : I understand the concern. I would like to place on the record my own recognition for the work that CRC has done and the excellent reports that they have produced which give the Department good material to work on. However, I don’t think there’s any doubt, particularly not with four Ministers all of whom have at least partly rural constituencies, that DEFRA is the Government’s rural champion. It’s right there in our name, and it’s something to which all four Ministers attach great importance. I think it does allow that single clear voice within Government to fight the corner for rural communities. Hopefully, Mr Rogerson, you’ve seen in our structural reform plan that we’ve given expression to that in our priorities and in greater detail of the plan.

There are at least two specific areas where, as a Department, we would like to work across Government to improve the quality of services available in rural areas. One of those is rural broadband. Together with the Secretary of State for Culture, Media and Sport, we’ve already made an announcement about how to address the problem that significant parts of the countryside are without internet access. Farmers are expected to file forms online, but a third of them don’t have access to rural broadband, which demonstrates just what a problem this is. Working together with my colleague at DCMS, we have identified the resources to try and address this problem in two ways: first of all, the complete gap of no internet access, but secondly to improve the speed of access to the internet. That constitutes one of our priorities.

The second area is rural housing. And working together with the Department of Communities and Local Government, we are keen to address the shortage of rural housing, particularly affordable housing. The community land trust model is something that DCLG has promoted under the concept of community righttobuy in order to raise awareness of the opportunity in rural communities for small incremental developments of housing that is in very short supply in rural areas, whether it is starter homes for young people who otherwise can’t remain in the village in which they grew up, or indeed stepdown accommodation for the elderly, who otherwise might have to go to sheltered accommodation tens of miles away, where they can’t be visited by their friends and relations. we’ve chosen rural housing and rural broadband as two areas in which we can act as a rural champion across Government.

Q36 Dan Rogerson: I hope that that is the case. Perhaps as an observation, I think that there are a number of areas of policy-health, education; all sorts of areas-that maybe don’t impact very much on the delivery side of what the Department has done in the past and will continue to do under this Government. I suppose I am just seeking your reassurance that there will be enough capacity in the Department to be able to look at ruralproofing, to use a fairly wellworn phrase, across those other Departments, where those are less explicitly rural concerns. I’m delighted that you mentioned those issues, in particular housing and broadband, but there are obviously services that everybody relies on. Will there be capacity to look at what other policies are coming forward in other Departments?

Dame Helen Ghosh: Yes. As the Secretary of State said, some of the policymaking capacity in the Commission for Rural Communities will be joined with the Department, and it’s clearly a ministerial priority. In thinking about how we divide up our resources, including our administrative resources, we will continue to want to give priority to rural issues, because that’s clearly a priority in the structural reform plan and for the Government as a whole. Our experience is-and I think the new structures at the centre of Government are very helpful in this-that it’s good to have expert staff. It’s essential to have good analysis of the problems and possible solutions. We also need to make sure we engage at a political level across Government. For example, as the Secretary of State said, the fact that she’s a member of the home affairs committee, and the fact that we’ve been able to feed these concerns into discussions around spending mean that, at the centre, the Cabinet Office and the Treasury are seized of the importance of looking at the impact on rural areas of changes to mainstream services. That’s part of the analysis that we’ve been feeding in, in terms of what are the impacts of various spending options on rural areas. So all of that I think comes together in a more positive ruralproofing across Government.

Q37 Neil Parish: Quite a difficult balancing act, this one. How will the Government balance the need for economic development in the countryside along with the protection of agricultural land and the environment. I’m very keen on the idea that the countryside is a living identity and needs to develop, yet not destroy the green belt at the same time.

Mrs Spelman : In all sorts of different ways, but the number one priority is to support British food and farming. We recognise that we need to support an industry that operates predominantly in the countryside, because we need it to be successful and produce more food, particularly as pressures come through climate change on food security, which the Government’s Chief Scientist identifies as a very real challenge coming down the track to meet us.

I think it will be, in part, working across Government, particularly in the planning system, where we are able to strike that balance. My colleagues at the Department of Communities and Local Government are alert to the need to protect the Green Belt. The reform of the planning system that they envisage still contains an important commitment to protect the green belt, which is there to prevent urban sprawl. There are very real opportunities for the countryside and those who live in it, the industries that operate in it, in our aspiration to green the economy. There will be green jobs that flow from our need to adapt to climate change, and many of those jobs will be created in rural areas. One of the consequences of another challenge coming down the track to meet us is increasing energy security, which will mean rethinking with a number of industries their own processes and assumptions about the cost of energy and what it costs to transport and distribute those products. It will mean that part of the greening of the economy may contain a greater level of localisation. There are a number of ways in which we can help across Government to strike the balance between the need for rural areas to be vibrant economically, while protecting the environment.

Q38 Mrs Glindon: Secretary of State, you touched on the fact that Government are putting an emphasis on improving broadband to rural areas, which is really important and good to hear, but could I ask you about what sort of time scale that will be in?

Mrs Spelman : Working together with DCMS, there are plans within the next two years for a proposal to proceed with three pilots in rural areas that look at a variety of different ways of improving coverage. There are some very good examples of best practice in rural areas. For example, I think in Northumberland, which is relatively sparsely inhabited, people are using the facilities of existing parts of the public infrastructure. So for example, if a doctor’s surgery has got internet access, because the surgery is only open so many hours of the day, the community might have access to that broadband facility out of hours. That, for example, would enable farmers to file their forms online. Looking at the existing infrastructure in terms of using existing pipework for cabling is another aspect of these pilots.

The pilots and their location will be announced soon, but the proposal is to have them up and running within two years. The resources for that arise from the underspend on the digital switchover that was planned by the BBC, so the resources for this come not from within DEFRA, but from within DCMS.

Q39 Mrs Glindon: So there is spending for that. And has there any exploration around private funding to meet that too?

Mrs Spelman : Again, there are some fantastic examples of best practice where there’s a combination of public and private funding. So the one that comes to mind is a village in Kent that was without internet access, where the local community managed to raise some resource itself at the same time as BT were making an investment in an upgrade of the facility for superfast broadband. The community persuaded the local authority to provide a grant just to complete the amount of resource required to make sure that everyone had fast broadband access.

Q40 Mrs Glindon: On the timescale, I’m pleased to hear there will be pilots, but in relation to the full rural community, only a small percentage, I imagine, will be covered by the pilots beyond the two years. Because of the importance of this, and because of business and social reasons, have you given it fuller consideration?

Mrs Spelman : The pilots aren’t the summation of what we would do in this area. They are designed to look at different models that may be an example of best practice that we can crossfertilise. The example of public and private finance coming together in a small rural community in Kent is something for which every village could be on alert. If your parish council could find out that BT are planning to upgrade your internet speed as a community, piggybacking on the back of their investment, there may be an opportunity to extend the reach of that. It’s something that could be done right away. If one has the intelligence as to where the private provider is about to achieve the upgrade, there’s an opportunity for that community. So just because we have chosen three pilots to look at three different aspects of improving the coverage doesn’t mean that everyone has to wait for those pilots to be complete. There are things we already can learn from best practice and apply in rural areas.

Q41 Amber Rudd: Secretary of State, I’d like to ask you about the enormous subject of CAP reform. If you wouldn’t mind giving us what you think the UK’s main objective is for 2013.

Mrs Spelman : The UK’s objective will be to get the best deal for farmers, consumers, the environment and taxpayers. That’s our objective and we believe that we can make progress with that. I think the fact that the coalition has chosen to be a positive participant in Europe has already reaped dividends in terms of a common position in Europe on things like commercial whaling and illegal timber logging that demonstrate that positively participating and building alliances, for a majority view or even in the case of those two examples a unanimous view, can actually bring good results for all of us. So we will be using the same principle of positive participation on CAP reform.

I can tell the Committee that we did invite the Commissioner Ciolos, the Agricultural Commissioner, to come over to the United Kingdom very early on in our tenure, and we extended that invitation to the agricultural Ministers of all three devolved Administrations. It was an incredibly productive evening in terms of our relationships with the devolved Administrations, but also with the Agricultural Commissioner. He shared with us what his initial thinking is on CAP reform, and I think it is all right for me to say to the Committee that there are two things he would like to try and achieve from this CAP reform: one is simplification and the other is flexibility. Simplification is music to our ears here in the UK, and in return, it was music to his ears that the coalition had gone ahead with its commitment to establish a red tape taskforce. I’d already outlined that at an Agricultural Council meeting. I thought it was interesting that other Ministers found it quite novel that we were going to ask the farmers to give us their thoughts on how we might reduce the burden of red tape, and the fact that this idea might just catch on. That red tape taskforce has been set up, and is chaired by Richard McDonald. It’s open right now to suggestions from all parties about ways in which the burden of regulation can be reduced without compromising the objective for which the regulation was set up.

Dame Helen Ghosh: Can I just add something? The Secretary of State said that simplicity will be the key if we’re going to make any CAP reform deliverable. One of the lessons we have learned from the 2005 experience is that policymakers and negotiators will need to work absolutely hand in glove with the Rural Payments Agency and any thoughts around a new IT system to make sure that anything we are negotiating is actually deliverable. We did that very successfully in the CAP health check. The two DEFRA policymakers and the RPA worked very closely together to make sure that the stuff that came out of that agreement was something we could do. We’ve done it very smoothly, so that’s the main lesson we have learned.

Chair: Thank you. Now, Bill Esterson.

Bill Esterson: I think the question has been answered, Chair.

Chair: Okay, thank you.

Q42 George Eustice: I was particularly interested in the potential for being able to go further on things like EU directives, as opposed to regulations, and whether you’re making that distinction yourself if we nationally take a different approach in terms of directives where we might have got it wrong previously?

Mrs Spelman : Yes, I think a couple of things there. At a European level, I think there’s a realisation all these directives cost money. We can carry on passing them, but have members states the resources to implement them? Quite a significant realism is entering into thinking amongst Ministers and Commissioners about this question. It is a theme that will increase in importance, because of the times we’re living in; the whole of Europe is affected by this. We’ve signed up to a lot of directives where everyone is persuaded of the objective, but the question is: is the implementation practicable financially and practically? I think there will be a period of looking hard at the way those directives operate to see whether they can be part of this drive for simplification.

Dame Helen Ghosh: I am not anticipating what Richard McDonald’s team will look at, but as you’ll probably be aware, we have inherited, as the Secretary of State implied, environmental directives that were basically very badly drafted. They are all drafted in terms of inputs or events, rather than what is actually the environmental outcome that we’re trying to deal with. So I know for example that Richard’s taskforce is looking very closely at the implementation of the nitrates directive, which is precisely like that. So that’s the kind of area that his team will be pursuing, and if we can find ways we can move on that and, indeed, also discuss it with the Commission, that’s what we will do.

Mrs Spelman : There’s another very good example, which I discussed with Commissioner Potočnik-the air quality directive. The position at the moment is 26 out of 27 member states can’t comply with it, which damages the credibility of the directive. Everybody perfectly understands the importance of improving air quality. It is absolutely central to people’s health and wellbeing, but the way the directive is crafted at the moment, if 26 out of 27 Member States are unable to comply with it, then we have a problem.

Dame Helen Ghosh: And it isn’t based on science.

Q43 Tom Blenkinsop: In terms of the alliances that you talk about in relation to CAP reform, they were actually built within the European Parliament themselves.

Mrs Spelman : That’s right.

Q44 Tom Blenkinsop: Do you think there will be stumbling blocks for your own political party in the European Parliament in trying to draw on those alliances which are required to get CAP reform?

Mrs Spelman : Well, two things on that. The reason why the role of the European Parliament is so important is because, since the Lisbon Treaty, the European Parliament has the power of co-decision and that is a very important reality with this particular CAP reform. That is something that has changed from the last time the CAP was negotiated, so working with European Parliamentarians is going to be extremely important.

Again back to the coalition’s commitment to be a positive participant, we want, through the European Parliament, as well as through the Council meetings, to give real expression to our positive participation. For example, at DEFRA team meetings, Liberal Democrat and Conservative MEPs are regular invitees. We need to work hand in hand with our European Parliamentarians, as we go through this important discussion on CAP reform.

As regards alliances and countries, I think one of the interesting things about the way European politics works is, of course, your alliances change according to subject matter, but as far as the common agricultural policy is concerned, there’s a longstanding traditional alliance between the United Kingdom and the Scandic countries. They, for example, are very persuaded of the importance of providing other public goods in addition to sustainable food production, but a country like Germany, for example, is very interested in seeing the burden of red tape simplified. So we form alliances with a wide variety of member States by subject matter, certainly in relation for example, to illegal timber logging, which gave rise to a vote in the European Parliament. It was actually the close working between Germany, France and Britain that managed to bring the whole of Europe to a common position at Council level, and gave rise to a vote in the European Parliament to ban illegal timber entering the European Union. The alliancebuilding is something, I understand very well and am active in pursuing.

Q45 Tom Blenkinsop: I don’t want to go off-topic too much, but it’s interesting that you bring up illegal timber logging. I believe that the Conservative party, in its own manifesto, give a commitment on that.

Mrs Spelman : Yes.

Q46 Tom Blenkinsop: And previously, on the green alliance, it would include UK regulation to top up the EU Directive. In the coalition agreement, that’s a priority as well, but there’s been no indication that there is going to be any further UK regulation to back up that EU directive.

Mrs Spelman : That is easy to explain. First, we have to see what form the directive takes. It will take about 18 months for that to be worked through in terms of European legislation. Once we’ve seen that, we will know what we need to change in UK legislation. It is very important to us. The EU is one of the largest importers of illegal timber and, I’m afraid to say, the UK is a significant importer, so it’s very important to us to tackle this issue, but the time scale is uncertain for knowing when, in European terms, the regulations will become clear.

Q47 Tom Blenkinsop: But it’s also widely known that illegal importers of illegal timber set up shell companies via commercial lawyers. That was well known prior to the general election as well, I believe, for all parties concerned, and that’s why the commitment previously by your party and reiterated in the coalition agreement was to have further UK legislation to top up, if you like, the EU Directive.

Mrs Spelman : Absolutely, to which we remain completely committed to do. Prior to the general election, there wasn’t a ban in place at a European level on illegal timber imports, and a significant amount of work had to be done with certain countries that had strategic interests in this area before a common position could be found to ban illegal timber from Europe. At the point at which the manifestos were drawn up, we didn’t have a ban. Now we have had a vote in the European Parliament, and because this common position was achieved, we can look forward with confidence to a set of regulations at European level, but the timing of that is not within DEFRA’s gift.

Dame Helen Ghosh: Yes, in fact, the commitment to the necessary UK legislation appears in our structural reform plan, but with a fairly broad time horizon, because we don’t know when it is.

Mrs Spelman : Yes, it may take 18 months roughly.

Dame Helen Ghosh: So it may be as late as November 2012.

Q48 Chair: Can I just briefly return to simplification? One thing that concerns farmers is the number of inspections they have before they qualify and also the bewildering number of organisations that they have to apply to, so when they come to me, I’m often stumped. There’s Natural England; there’s the RDA; there’s the county council-there’s a plethora. Is it part of the Department’s view that as part of the simplification process internally of how CAP will apply that that will be looked at?

Mrs Spelman : Absolutely-it works at both levels, as I indicated. The Commissioner himself has given an indication that the reformed CAP will be simplified at European level, and we have brought that to the UK level. In fact, we’ve got ahead of the curve in terms of proposing simplifications. This red tape taskforce, which has been set up, has already begun the exercise of thinking how to reduce the number of duplications of inspection. I refer Select Committee Members to the Farmers Weekly edition of the 10 September, which contains an item on red tape, in which a number of contributors have highlighted the duplication in inspections in ways in which the quality of inspection is in no way diminished by synchronising it with another visit. So in practical terms, both at the European and the UK level, the simplification is finding its practical expression. It’s just I think that we can quite justifiably say that we have got ahead of the game on this one.

Dame Helen Ghosh: Another driver beyond the McDonald red tape taskforce is, of course, the need to save administration finding, so the Environment Agency and Natural England, for example, and our other arm’s length bodies are already working very closely together to see how they can reduce costs, by one person taking the lead on a particular issue, one person being the as it were "statutory consultee" on behalf of DEFRA. That again will produce we hope a significant simplification across a number of areas, for example, on planning applications too. A bewildering array of DEFRA bodies are involved in those sorts of issues and we won’t be able to afford that in the future.

Q49 Amber Rudd: Secretary of State, you talked earlier in our session about the level of fines that we’d had to pay because of the rural payments issue. Have you made any assessment in your Department on whether there could be an increase in the number of fines that we could be subject to because of a cut in the budget for the Department that could lead to difficulties keeping up with EU directives and requirements?

Mrs Spelman : It is a pressure that DEFRA faces, but as the Permanent Secretary indicated earlier, one of the things about the fining process at the European level is the fact that it’s quite slow in its evolution, so we have years, I think, of warning in some cases of an infraction cost, giving the member state the chance to mitigate that. I’m trying to think of examples that I can give you. In the short time that I’ve been there, I’ve only seen the ones that are overhanging from previous years.

Dame Helen Ghosh: Urban waste water is a good example, in relation to the recent announcement about the Thames tideway. In a sense the EU disallowance and the fines around the single payment scheme are "easy" to predict to some extent. You know broadly what their criteria are. You know what the kinds of ranges of percentages are. No other member state has yet had a finalised disallowance for the new post2003 CAP, but it’s calculable and that’s how we’ve been able to reach a view on what our likely provision needs to be for the future.

I think the infraction element is a much harder risk to estimate. We try and estimate it very hard. We have a specific item in our management board in our finance reports on infraction risk and regular reports from our lawyers about the stage we’ve reached, the letters we’ve had from the Commission, the point at which it’s absolutely clear we need to show that we are taking action-again, the urban waste water directive would be a good example- because once you’ve got into infraction, although I think there are only a couple of examples across Europe, you are talking about really, really, really big fines that would be beyond anything DEFRA could find. We couldn’t make provision for fines of that kind. So we try and track and mitigate our infraction risks very, very carefully and that’s very often an issue we have to raise with other Government Departments, because their actions can impact on infractions issues that are within, as it were, DEFRA’s policy areas. You know ,things like the large farm directive and those sorts of things.

Mrs Spelman : I can reassure you that seeing the financial implications of these infraction costs would make me extremely cautious when looking at new directives to understand what liabilities were associated with signing up to them. Although the lead time between the passing of a directive and being faced with an infraction may be so great you pass on the risk to your successors, none the less, I think we have a responsibility as a Department to look very closely at what the implications are for us in any new directive.

Q50 Chair: The Permanent Secretary said that there were fewer delays in this year’s applications for farm payments. That’s not what my local farmers are telling me. Are you absolutely convinced that there are no delays in this year’s applications?

Dame Helen Ghosh : No, what I was saying was that there were still delays in some particularly complex cases. Overall, what we have done year on year is, in average terms, pay sooner. I’m trying to remember the figure, but I think 80% of farmers received their payment towards the beginning of December in 2009, which was unprecedented.

This year, there was a tail of difficult cases at the end, which were slower in payment. Since we’re trying to provide a good service to all farmers, I think we can say that the averages have got better, and that the percentage in value that we paid by a certain time of year has progressively increased year on year, but we know from customers and from Members of Parliament that, regrettably, there were some cases this year that just were late and we should have paid them sooner. However, in many cases they were quite complicated issues.

Q51 Chair: Traditionally, there’s been an underspend. Is that because fewer claims were being validated? Does that mean fewer claims were made or fewer claims processed from January to March 2010?

Dame Helen Ghosh: I’m trying to get the statistics on an underspend in relation to claims. Certainly, the number of claims has declined. In the first year, it was something like 120,000; it’s now getting closer down to 100,000.

Q52 Chair: I know that previously the Department’s been criticised for not having the financial director on the board. Might you revisit this and consider putting them on the board?

Dame Helen Ghosh: We do have the financial director on the management board. What we don’t have-and this is true of a number of Departments of our size-is a qualified accountant at directorgeneral level. What we have is two financially qualified directors: one doing the management, as it were the daytoday accounting and management of our finance; the other has been leading our work on the spending review. He’s both an economist and a qualified accountant. They report to one of our very experienced directorsgeneral.

I think that the success of that model is reflected in the fact that we have successively, both in our capability reviews and public comments made on us by the Treasury, received high praise for our financial management, particularly resource management-how we move funding around. So we believe that model works, and the Treasury is happy with that model. The financial director-the director responsible for management of the accounts- Anne Marie Millar, is part of our management board, so she comes to our monthly management boards and gives a finance report, and indeed comes to the regular business meetings with the Secretary of State.

Mrs Spelman : Yes, I’d certainly like to record because I think it’s important that the work of the finance director on the preparations for the comprehensive spending review were very thorough and of a very good quality. I think the fact that, as I’m sure Committee members will have read, DEFRA has been praised in its strategic approach has to do with the strength and capacity at that level in the Department that has enabled us to approach the exercise in such a thorough way.

Q53 Chair: If there’s been a history of underspend, has the Treasury given you an indication that they’ll take that into view in setting the comprehensive spending review?

Dame Helen Ghosh: I think this again, as the Chairman will know, is a topic we’ve discussed before. In terms of our DEL budget-the budget for which we’re bidding in the comprehensive spending review-on which we plan and against which we have to live, we have not had significant underspends. Our underspend this year in DEL terms was around £63 million, which is less than 2% on a budget of £3 billion-plus. That’s quite normal for Departments and, indeed, our underspend enabled us to make some provision for SPS, which is good for the future.

I think the issue that the Comptroller and Auditor General raised, which we’ve discussed with this Committee before-and if I had an accountant sitting next to me, she’d correct me-is what one might call the "cashflow". At the moment, what Parliament has to vote us is cash, so that we can cover all our payments, our EU payments and simply the cashflow that we have to pay out. This year and in previous years, it’s a very challenging calculation to make for a Department like ours, where we in particular have to deal with the swings in currency exchange rates.

We had hoped this year to get that figure lower and, indeed, we would have done had it not been for a last-minute accounting issue arising at the RPA, which meant we suddenly discovered, again in lay person’s terms, that we had an accounting credit from a previous year. So what I might call our resource/cash underspend was something like just over £900 million, but it has no opportunity cost. It is purely cashflow, and the Treasury, I’m sure it is true to say, has literally never raised that issue with us. They have never expressed concern to us about that, although as a proper, wellrun organisation, we would like to get our estimate better. You cannot, as you know, overspend on a parliamentary cash resource, so you have to be pessimistic. You have to do some very clever calculations about exchange rates. However much you hedge, as we do, on our exchange rates, you have to be quite careful, particularly towards the end of the year. So as I say, it was extraordinary circumstances that led to that high level of cash underspend this year, but it has no opportunity cost, and the Treasury is not concerned about it.

Q54 Tom Blenkinsop: How concerned should we be about rising wheat prices in the summer of 2010?

Mrs Spelman : Concerned, in the sense that they are an indication of what the Chief Scientist predicted would happen, which is that one of the impacts of climate change is the increasing frequency and severity of extreme weather events. Whether that was extreme drought leading to wild fires in Russia, or drought conditions in Canada, or elsewhere in the world flooding, including in Pakistan, the fact is that this is predictably what the scientists tell us we have to anticipate as part of our understanding of what is required to meet food security. In relation to grain stocks, the UK is well provided with grain stocks. There’s not a question of food scarcity here this year. It will drive the prices up on global markets of course, because of the overall security issues.

What I think it means going forward is that we need to plan quite carefully for the future in a couple of respects and they’re right there in our number one priority for the structural reform plan, which is to support British food and farming, because we may need them to produce more, not just for domestic consumption, but because we’ll be trying to feed a hungry world.

If one looks at what the Chief Scientist calls the "perfect storm" scenario by 2030, there could be a coincidence of energy security problems and water security problems, which together create food security problems. That’s highly predictable-that’s his analysis. The question is: what are we going to do about it as a response? One of the things that I think is significantly different about what went before is to actively encourage the food industry and farming industry in this country to produce more. If we look at the predicted pattern of rainfall and water shortage across Europe, there is going to be a really distinctive north Europe/southern Europe divide, which will create very real tensions on the common agricultural policy. Improving our resilience by helping our own industry to produce more food in a sustainable way is going to be part of our preparations.

Q55 Tom Blenkinsop: So will you be continuing with the Technology Strategy Board’s £50 million investment in food research and innovation?

Mrs Spelman : Obviously, research and development are an integral part of the ability of the Department to build resilience into those industries and serve our economy and our society. Again, as part of the overall considerations that we’ve had in the spending review, we’ve seen the importance of the evidence base behind what we do. And you will see a number of our policies are based on science and are evidenceled. That can’t be done without investment in research and development.

Q56 Tom Blenkinsop: So that £50 million will be guaranteed then.

Mrs Spelman : I can’t discuss the details of the spending review. I’m really sorry.

Dame Helen Ghosh: That money, as you know. comes in from a variety of sources. Something that Bob Watson, our Chief Scientist, has been doing very successfully is looking with his colleagues across government in the research councils at how we can pool resources and that platform is one very good example of that. The other thing we’ve been doing through our evidence and innovation strategy is looking at those areas where research is what scientists call "mature", where we don’t need to carry on putting in so much resource, for example, around animal welfare or around spongiform encephalopathies of various kinds, but then look at where we need to start focusing resource. The impact of climate change on food is one of those, but very much in partnership as far as we can, so we can leverage as much as possible.

Q57 Amber Rudd: Looking at the work that DEFRA has already done on food security, could you tell us how the Government is going to perhaps develop and build on "Food 2030" that was published at the beginning of this year?

Mrs Spelman : We certainly shouldn’t reinvent the wheel. The food strategy that was developed was developed with all the stakeholders that are involved, so it is something that we take and will continue to implement. The preparation work has been done, but it is given the force of expression as the number one priority in our structural reform plan. We had choices as ministers to make, but we’ve chosen to do that precisely because we take the analysis of the Chief Scientist seriously and because DEFRA is the Department across Government that is responsible for adaptation to climate change. That is our role, so right across Government we will be working to help all Departments on the adaptation.

When it comes specifically to food procurement, you might have heard me say in oral questions that we want, as far as possible, to encourage the public sector to procure food produced to British standards and that we will be revising the guidance to them on the best way to achieve that. But there are lots of examples of good practice, which is something that can be replicated. I use the example of the Nottingham NHS Trust, which now procures all its fresh meat locally from around the Nottingham area, and Shropshire County Council, for example, which procures its fruit and vegetable produce for school meals from the local area. Local isn’t always the right answer to food security, because so far despite climate changes we’re not producing bananas for example. There’s a question of seasonality, too, so there are carbon footprint implications of seasonal food production, but there are all sorts of ways in which we can encourage the public sector and thereby give the taxpayer that assurance that the food it’s procuring increasingly is produced to our very high standards that reflect the animal welfare concerns that a consumer has, as well as the safety and quality of the food, and the fact that it’s been sustainably produced.

Q58 Chair: Thank you. Just given that we’ve only 14 minutes, I’d just like to turn to animal health and, first of all, just ask if I may welcome the consultation that the Minister of State announced today. Secretary of State, you’ll be aware of the Committee’s report that was published on the 27 February 2008.

Mrs Spelman : Yes.

Chair: If you could give us some assurance in terms of the restrictions that we made there-that this will be in consultation, that it will be for a longer period-I think we said sustained for at least four years-and that we should look at a wide geographic spread. I know there are very real concerns-there are a number of Members of the House that will be affected-about giving farmers security. When we had the GM trials, that was not the case. Finally, what are the wider wildlife measures that might be in the consultation?

Mrs Spelman : Thank you very much for raising this subject, and I know that you did seek an urgent question today on it. I knew that I would be coming to the Committee, so I would have been surprised if the subject hadn’t been raised with me. It does give an opportunity just to touch on this. I would like to stress that it is a consultation-this is very important, because ministers have not concluded on this issue. The point of the consultation is to inform that decision. Any decision to proceed with badger culling would be taken early in 2011 on the basis of the material we received through the consultation. I certainly have taken on board the views of the Select Committee in its previous composition, which identified what a serious issue this is and called on the thenGovernment to look essentially at the option that we have proceeded with. So the consultation is important and I want to encourage people to take part in it.

The security issue is a very real one. I’m very conscious as a Minster, and have been advised of the security risk to Ministers involved. More widely, farmers themselves have to consider the security dimension of their own involvement in a cull should one be authorised to take place, but that could be part of this consultation. All of this is at consultative level, and it is an opportunity to look at all the issues that you have raised, including the issues in relation to wildlife, both the animal welfare issues in the aspects of how any cull would be conducted, and looking at the combination with the vaccination programme. I myself visited the pilot vaccination programme in Gloucestershire in the summer to see for myself what is involved with the vaccination programme and how it might work in conjunction with a selective culling practice. All these things are part of this statutory consultation procedure and we won’t predecide any outcome of that until all of the information has been obtained.

Q59 Chair: And what’s the deadline for consultation?

D ame Helen Ghosh: 8 December.

Just on the point about security, there’s a very detailed impact assessment towards the back of the consultation document and that includes, in the estimate of the economic impact of the various options, reference to the Government support that would be needed in security measures, so that’s in there.

Chair: Thank you.

Q60 Bill Esterson: The previous Government made a decision to go with vaccination, not culling. They had gone for six trials, and you cancelled five of them. You made a previous comment about basing policies on science and making them evidence based. The independent scientific group concluded that badger culling cannot meaningfully contribute to the future control of cattle TB. Why are you not accepting that evidence already, and why are you going back on what had previously come through as an evidencebased approach?

Mrs Spelman : The scientific group based its view on evidence collected during the randomised badger culling trial. What we have subsequently is the evidence that arises from the completion of the trial and the period after that trial, as there is an impact of the badger culling over a longer period of time than the actual period in which the trial was conducted, which alters the evidence that was obtained during the trial itself. On the vaccination trials, essentially, the vaccination trial has been limited to one site, because the same things were being tested. The tests are, in fact, conclusive, but there are problems with the vaccination. At the moment there is no ingestible vaccine.

Dame Helen Ghosh: Yes, you can’t give it as bait.

Mrs Spelman : Which is most unfortunate, but unlike for rabies where the rabies vaccine were placed in chocolate drops that were dropped by the air and the reservoir of rabies in the wildlife population was eradicated, because when the chocolate drop was consumed, the vaccine wasn’t destroyed. At the moment, that kind of solution is just not available to us. The trial that I went to see involved having to catch the badgers first before they could be vaccinated. Essentially, the trial has established what is required in order to carry out a badger vaccination programme. It is, as the Committee would imagine, quite difficult. It’s a wild animal. Trying to catch badgers from their setts is not easy. Some may be caught from the sett, but not others, and for a vaccine programme to be successful, an entire population that has been established first of all to be TBfree has to be vaccinated, otherwise it is less than successful. However, one would hope that the science will continue to advance, while any package of scienceled, evidencebased measures is implemented and, in time, we may have a solution-an oral vaccine that can be ingested-but it’s not available at present.

Q61 George Eustice: I just want to ask you about the decision to merge Animal Health and the Veterinary Laboratories Agency and whether that was motivated by a desire to improve the effectiveness of them or whether it was simply a costsaving measure.

Mrs Spelman : Again, it was before my time that the last really serious foot and mouth outbreak occurred. Lessons are drawn from any disease outbreak, but one of the lessons that was drawn was that there was a degree of duplication between the two laboratories in dealing with the outbreak, and that the merger of the two laboratories would reduce the duplication. There are obviously also cost savings involved, but I think that the fact that the vets and scientists concerned welcomed the merger is indicative of the fact that, from the point of view of professional practice, they saw an advantage in the merger of those two facilities.

Q62 Tom Blenkinsop: Just a small point. Can you explain to me in detail the fundamental difference between catching a badger and culling, and between catching a badger and vaccinating it, and what the difference in cost and time would be?

Mrs Spelman : Obviously, there are some quite fundamental differences. If you vaccinate the badger, it’s still alive. If you’re culling a badger, it’s dead at the end of the process, but you would have to catch the badger in both cases. I’ve seen the traps laid in the countryside. You might or might not catch them. You might or might not catch all the badgers in that sett. First of all, if you want to be effective with the vaccine, you have to try and vaccinate the animals that are free of the disease. There are always problems of masking the disease, if you vaccinate some of the badgers in the sett. I wish it was the silver bullet, but it isn’t yet, and that is why the coalition agreement makes it clear that we would have a scienceled, evidencebased package of measures to try and tackle the spread of the disease.

The fact is that badger TB is spreading throughout the country over time. At one point, the disease was virtually eradicated, then it reappeared in the south-west and has now spread right up to the west midlands, my constituency, and into Staffordshire and Wales. As the disease explodes among badger populations, it gets more and more difficult to tackle it and to find contained ways of dealing with it.

Dame Helen Ghosh: Vaccination cannot solve the problem of the animals that are already diseased. That’s one of the fundamental differences. Of course, the consultation document puts forward two options for the cull; one is free shooting and one is trapping and shooting, so there are a variety of options on how the cull will be carried out put forward in the consultation document.

Q63 Bill Esterson: I take the point about badgers that are already infected, but if we talk about the science of it, the independent scientific group was clear that a cull wouldn’t make a meaningful contribution to getting rid of bovine TB, but it could actually make it worse and those were their findings. The fact that there were six trials and only one of them has gone ahead reduces the potential benefits of carrying out trials as evidence as well.

Dame Helen Ghosh: The trial on vaccination that the Secretary of State described is not about the efficacy. It’s about the practicalities of vaccination, so that is what it is testing. It is testing how easy it is or is not to deliver the vaccine, rather than what is subsequently the impact in terms of disease.

Q64 Bill Esterson: So that’s the work that needs to be carried out to find a better way of delivering the vaccine.

Dame Helen Ghosh: Delivering and, as the Secretary of State said, one trial of that is probably enough. The Secretary of State referred to the fact that subsequent analysis a few years later carried out by Christl Donnelly at Imperial College did a further analysis of the longerterm impact of the Krebs trials. You’re absolutely right, but in fact the consultation document is very much in line with the original recommendations of the independent scientific group, which said that, if a cull could be carried out over a large enough area and over a long enough time, which is reflected, picking up the Chairman’s points, in the square metreage that’s proposed and in the fouryear limit-and again the consultation refers to the fact that ideally the area would have a boundary upon it, some kind of natural boundary -it could have a positive impact, and avoid the risk of perturbation, which was also found.

Bill Esterson: A very big "if".

Q65 Neil Parish: I very much welcome the consultation, because I farmers in Devon and Cornwall, and all over the West Country are at their wits’ end. I think perhaps I would say to the Secretary of State, that if you could cull and use local knowledge of where the infected badgers are, that would be extremely useful, then perhaps vaccination could be used as a ring around that area.

Mrs Spelman : Absolutely, absolutely.

Q66 Neil Parish: So I think, you know, we have to use all these combinations.

Mrs Spelman : Yes.

Q67 Neil Parish: I don’t think anybody wants to shoot or cull all badgers.

Mrs Spelman : No.

Q68 Neil Parish: But what we do need to do is get the disease under control, and there’s no doubt the badgers are infecting the cattle and we’re taking out the infected cattle. I think this is what we’ve got to face up to-some 16,000 cattle alone in the west country.

Mrs Spelman : I welcome those comments and I’d like to make it perfectly clear to Committee members that nobody wants to kill badgers. Believe you me, coming into this post, I listened attentively and carefully, to all the analysis of the scientific experts, and read it all very carefully. If there was another way, we would rather there was another way, but the fact is that there isn’t a silver bullet available at this point in time, and not in the immediate future. So we are at the point where we have to deal, as Ministers, with the fact that the disease is on the increase. We are destroying 25,000 cattle a year as a result of the infection and the herd breakdowns at a cost to the taxpayer, but that’s not the sole criterion.

There is obviously a serious problem of a reservoir of the disease among wildlife and successful TB eradication programmes in other parts of the world have not been achieved without culling as part of the package, but the hope would be to arrive at a badger population clear of the disease, as well as a cattle herd clear of the disease. That must be the objective, but it does mean a sustained period of applying these measures over a number of years-a minimum of four years-for the beneficial impact to take place.

The consultation is one in which we weigh up all the contributions from all the interested parties, and I imagine there will be a lot of interest in the subject. We were aware of that when we tabled a written ministerial statement today. We put it down on the Order Paper yesterday. Ministers have tried very hard to respect the strictures of the Speaker, by not going on to the airwaves before that written ministerial statement was available to Members of this House, but my hon. Friend the Minister of State has subsequently sought every opportunity to engage and explain to everyone who is interested in the subject the difficulty of this decision, including briefing Back Benchers in the House this morning.

Chair: Thank you. If we could release the Permanent Secretary.

Dame Helen Ghosh: Thank you.

Q69 Chair: Thank you very much. I just have one last question for the Secretary of State. If I could just ask if we could write to you with the remaining questions, of which there are not many, but we’ve been asked to put them on the record.

Mrs Spelman : Yes.

Chair: We learned from the Government this week that there won’t be a Queen’s Speech for two years. I just wondered, as regards the White Paper and the potential water Bill, which was promised before the election by both the main parties what promise we can have that that White Paper that and Bill will reach the statute book before the next price review round commences?

Mrs Spelman : The straight answer is it must, because it will affect the price review. With the election in May, with quite a heavy legislative programme, it would be more practical to have an extended Session with the Queen’s speech on an annual basis in May. The timing of the White Paper and any subsequent legislation that would arise from the White Paper is designed in relation to the pricefixing timetable. The changes to parliamentary procedure are likely to help us with that.

Chair: On behalf of the whole Committee, can I thank you for being so generous with your time, Secretary of State, and the Permanent Secretary, and I’m sure we’ll have many other opportunities. If I could just ask that Members of the Committee to remain in the room, as there were three items of private business that we couldn’t reach beforehand and nothing to do with this business. Thank you very much, indeed.

Mrs Spelman : Thank you very much.