Michael Jack ~ The report on the Rural Payments Agency can be summarised as a classic piece of Select Committee work. We were dogged in our determination to get to the bottom of what went wrong. We took our time, but we finally got our man - as the Mounties say - when we got hold of the former chief executive of the RPA, Johnston McNeill. In our discussions with him, we were able to get to the heart of what went wrong. However, we had already made our own initial foray into the subject; in its previous work, the Committee warned the Government that change to the way in which the RPA operated would be fraught if the agency did not have the right IT and computer systems expertise. Despite those warnings, given in 2003, there has been a debacle concerning a core responsibility of the Department for Environment, Food and Rural Affairs. That is why our report goes beyond the mechanics of what went wrong and explores fundamental issues to do with accountability in government.
One of the core responsibilities of DEFRA is to ensure that farmers are paid a just price, and on time. That is about not just ensuring the survival of farming businesses, but making certain that the rural economy's cash flow is not disrupted, and that a central function of DEFRA is carried out effectively and efficiently. In the case of the Rural Payments Agency and the delivery of the single farm payment, that was not the case.
The problem began in 2001, with the RPA change programme, and it came home to roost when the European Union agreed decoupling for the single farm payment on 26 June 2003. A year later, on 17 June 2004, Mr. Andy Lebrecht, a senior civil servant in DEFRA, told the Department's management board that payments under the new arrangements would be made by 1 December 2005. The die was cast, the expectations in farming were there and preparations had begun. By 19 January 2005, however, the Rural Payments Agency announced a delay.
The ministerial response from the right hon. Member for Derby, South (Margaret Beckett), the former Secretary of State, was to appear at the National Farmers Union conference and say that she was "bloody livid" about the situation. Although that was perhaps not the response that should have come from the Secretary of State, she should have been fully engaged in the decision-making processes that led to the problems that the RPA faced. She was the Secretary of State when the policies were designed and when the implications were considered, and she ultimately carried the responsibility for what happened in her Department - [ Interruption. ] Perhaps she is listening to the debate, and we may have an unusual intervention by telephone - perhaps not.
The way in which DEFRA went about introducing the programme was too much change, too soon. That is clear from what the Department has said in its as-yet-to-be-published report and from the information that the Department gave the Committee, which is why we singled out certain named individuals who gave evidence to us. We believed that they bore a responsibility for what had occurred, and I do not resile for one moment from the
9 July 2007 : Column 1254
fact that the Committee's report put down some strong words about who was responsible. One should bear in mind the billions of pounds that were not delivered to England's farmers and the rural economy, as well as the losses to the farming industry - calculated at £20 million - which will have an incalculable effect on the cash flow of the rural economy.
There are also the cost overruns to the Department. To look at the facts, the NAO said that DEFRA would realise only £7.5 million of the £164 million-worth of savings from the introduction of the single farm payment scheme. When it looked at the RPA operating business plan in late 2006, the NAO said that the RPA's running costs would be £197.1 million, with an additional £46 million on top of that, which consisted of a further £27 million in extra running costs and £19 million for new software developments, against an original budget of £190 million.
If that degree of financial mismanagement had occurred in a public limited company, the board would have been out, never mind the chief executive. That is why our report had some strong things to say about named officials, as it was quite clear not only from our analysis but from the work done by the National Audit Office, which has now been vindicated by the Public Accounts Committee, that we had to probe who was responsible for DEFRA's failure to carry out one of its central activities. Those failures to deliver have led DEFRA to face for the first tranche of failed payments a disallowance from the European Union of £131 million. In addition, there is a contingent liability on DEFRA's books of £305 million. Not all of it is directly related to the RPA, but that is an indictment of failure, and that is why our report was couched in strong terms.
Mr. Mark Todd (South Derbyshire) (Lab): One of the largest failures - probably the fundamental failure in this project - was that of risk analysis and risk management. Would it surprise the right hon. Gentleman that the former permanent secretary, who is one of the named officials in the report, chairs the body looking at risk management on behalf of the Treasury for the civil service?
Mr. Jack: That person will certainly understand about risk, but I am not so certain about management. The hon. Gentleman's point worries me very considerably indeed. At the heart of this matter are the mechanisms that the Government put in place when they introduce complex IT projects. Indeed, when the hon. Gentleman was a member of the Select Committee he highlighted that very point about the need to look at issues in detail and have the right expertise to guide us forward. What was clear, however, was the flawed relationship between DEFRA and its IT provider, Accenture, which was taken on to make changes in the Rural Payments Agency. Then, however, there had to be a second and subsequent discussion about how the single payment scheme would be introduced. DEFRA decided that it would remove some of its staff in pursuit of its Gershon savings, only to find that it then had to recruit another 900 temporary people in the Rural Payments Agency to make the scheme work. The very people who had experience of dealing with farmers were removed as part of the change programme, only to be replaced by less than expert people. The Department had a rural information system - a
9 July 2007 : Column 1255
computerised system that was supposed to cope with the mapping and to provide those running the single payment scheme with information - but it singularly failed. I could go on through the litany of failure.
On the question of risks, it beggars belief that the Office of Government Commerce did not put the brakes on what was happening. Yes, it produced some reports and red traffic lights, but despite the mounting risks of failure that were pointed out to DEFRA, which had a finger in the pie and an interest in the running of the Rural Payments Agency, and despite a great deal of investigation - I do not know whether the Department was blinded by events or by ministerial assurance that it would all be all right on the night - the wheel fell off big time. When, at the beginning of 2006, Ministers were promising payments first in February and then in March, the Committee produced an interim report warning of what was happening and talking about the need for interim payments, but we were rubbished by Lord Bach. I remember him talking on the "Today" programme about the Select Committee being chaired by a "very strong person, that Michael Jack - he's a Conservative." I resented the fact that he tried to politicise my work as the Chair to highlight the failures and danger points and what was going to happen with the Rural Payments Agency. In fairness to Lord Bach, he retracted some of those remarks when he gave evidence before us. When the wheel fell off, however, DEFRA had not heeded the warnings, and we now know what happened to the rural economy.
As for who was responsible and who should have accepted responsibility, the head that rolled was Mr. Johnston McNeill's - it was the agency's former chief executive who was fired. Sir Brian Bender, the former permanent secretary at the Department, whose name was on the documents about the Rural Payments Agency, the DEFRA change programme and the agreement on the path forward, and Mr. Andy Lebrecht, one of the most senior civil servants in the Department - he sat on the management boards of the Rural Payments Agency and, indeed, on DEFRA's own boards and should have been the link - were the people who effectively signed off what happened. Rachel Lomax, who was supposed to be an expert, was brought into the Department to provide advice. Despite all that, there was still failure, but only one person has paid for it with their job. The then Secretary of State went on to become the Foreign Secretary -