Extract from http://www.publications.parliament.uk/pa/cm200607/cmselect/cmpubacc/893/893.pdfHouse of Commons Committee of Public Accounts The Delays in Administering the 2005 Single Payment Scheme in England
Fifty–fifth Report of Session 2006–07
Conclusions and recommendations
1.
The Department and the Rural Payments Agency failed to implement the singlepayment scheme effectively. By the end of March 2006 it had paid farmers only 15%
of the £1,515 million due, compared with its target of 96%, causing significant
hardship. Taxpayers will have to pay additional implementation costs. In addition to
a provision of £131 million included in the Department’s accounts for 2005–06, the
Department has had to secure a supplementary estimate of £305 million to meet the
potential cost of disallowance of expenditure by the European Commission arising
on the 2005 and 2006 single payment schemes and the previous schemes
administered by the Agency.
2.
At the end of October 2006, some 3,000 cases for the 2005 scheme remained to besettled. The Agency subsequently managed to progress some of these outstanding
payments, but 911 claimants had yet to receive anything and 2,184 claimants were
awaiting a final ‘top-up’ payment by the time payments started to be made under the
2006 scheme on 1 December 2006. By May 2007 there were 24 claims, mostly
probate cases, which remained unpaid, but the Agency was still reviewing the
accuracy of a substantial number of claims already processed and making
adjustments both for over and under payment.
3.
There are a number of lessons to be learned by the Agency, the Department andgovernment bodies more widely.
. It selected the ‘dynamici. The scheme is small, covering only some 116,000 claimants, but the
Department made it unnecessarily complex by choosing to adopt the
most demanding implementation options
hybrid’ option for calculating entitlement, a one year implementation
timescale, and no de minimis threshold for claims. Scheme parameters
should not be chosen in isolation, but with due regard to the overall
complexity and risk they will jointly present.
ii. Because the government sought to implement the single payment
scheme at the same time as a wider business change initiative, the
Agency shed too many of its experienced staff and their knowledge at a
time when it needed them most.
It then spent some £14.3 million onagency staff in 2005–06 to process 2005 single payment scheme claims.
Before combining projects, their interdependency and the potential for
compounding risk should be assessed as well as the risks of the individual
projects.
iii Implementation of the project started before the specification of the
single payment scheme was finalised.
The aim was to meet the March2006 payment deadline, but the result was that the Agency had to make
assumptions on what the final regulations from the European Commission
would contain. It subsequently had to make 23 substantial changes to its
computer systems to reflect policy and regulatory revisions. The risk of
having to make changes later in the development of the scheme could have
been given more weight in determining the implementation timetable at
the outset.
iv Processing capacity had not taken sufficient account of the number of
maps and mapping changes that would need to be processed
. The schemewas based on land area managed, and incentivised farmers and new
claimants to register additional land. A proper estimate of the scale of the
work should be made by appropriate modelling and testing.
v The Agency tested each key element of the IT scheme before
introduction but testing in isolation did not fully simulate the real world
environment and problems emerged later.
Failure to test computersystems completely and adequately is a problem we have often seen with
government IT projects. Time should be built in to test the IT systems as a
whole as well as the individual components within it to obtain adequate
assurance that components are fully compatible and deliver the required
business process.
vi Without an individual or small team processing a whole claim end to
end, claimants found it difficult to obtain advice and information on the
status of their claim and Agency staff were hampered in their attempts
to resolve claimants’ queries.
The Agency had instead decided to adopt atask based design for claims processing to enable staff in different offices to
work on any tasks relating to any claim, but it did not adequately consider
the customer interest in following their claims through the process and the
consequent impact of the new way of working on customer service. The
development of new business processes should take the customers’
requirements into account in the design of the proposed system and any
potential contingency arrangements.
vii A lack of information was the principal cause of frustration and
complaint within the farming community.
Automated telephone linesprovided unhelpful responses such as “there is nothing that the call centre
staff can tell you about your payment”. Farmers were discouraged from
pursuing queries by being told that “If you contact us, this will divert
resources away from the urgent tasks of completing validations and making
full payments”. A communications strategy should be developed which
keeps all concerned but particularly customers in touch.
viii The Agency could not easily determine how much work remained
outstanding on claims each week and how long it would take to complete
them.
The Agency had deferred development of software to draw out keyinformation on the progress of each claim to focus resources on other parts
of the system it considered to be critical. Those with oversight of the project
thus found it difficult to distinguish between real progress and inherent
optimism within the project team. Specific measures should be developed
from the outset to enable implementation progress to be assessed
objectively, and make sure management information systems enable
appropriate data to be tracked.
ix The Agency mothballed one contingency system on the basis it would
have experienced the same data accuracy problems as the main system,
although it would have allowed processing on a claim by claim rather
than a task by task basis.
The Agency also decided not to invoke partialpayments available from the end of January 2006 because it expected to
make full payments in March 2006, but in the end was unable to do so.
Genuine and workable contingency arrangements commensurate with the
project profile and risk need to be factored into the business case and
developed from the outset.
x The Department did not recommend specifying a minimum claim size,
unlike Germany which specified a minimum claim of 100 Euros (around
£68)
. Adopting a similar approach would have reduced the number ofclaims by almost 14,000 (12%) and saved administration costs which may
well have exceeded the sums claimed. In designing processes and in
supporting documentation such as application forms, cost effective
opportunities to simplify should be identified and implemented.
xi The Department and Agency established separate boards to provide
technical programme management and critical challenge but there was a
lack of clarity as to which Board or individual was ultimately responsible
for decisions.
The challenge board took a greater role in decision makingas the project proceeded, blurring its scrutiny role. The departmental
Permanent Secretary at the time, Sir Brian Bender, bears responsibility for
administrative failure leading to additional costs that together risk
exceeding £400 million. There needs to be a clear distinction within project
governance structures between those responsible for oversight and
challenge and those managing the decision making process, even when a
project reaches a crisis point.
xii The Agency’s management team recognised the risks to delivery of the
project, but the Chief Executive, Johnston McNeill, felt unable to show
that it could not be delivered.
At issue, however, was not just the feasibilityof the project, but the acceptability of the risks, which were acknowledged
to be high. If Accounting Officers believe that their assessment of risk is
being discounted, the proper course of action is to seek a direction from the
departmental Accounting Officer or Minister concerned as to whether they
should proceed.
xiii The structures originally set up to oversee the project included two
Senior Responsible Owners, one for policy (in the Department) and one
for implementation (in the Agency).
Splitting the role of SeniorResponsible Owner was bad practice, and undermined the Department’s
ability to challenge the Agency’s progress reports. Every project should
have one Senior Responsible Owner so that lines of accountability and
responsibility are clear. The Department should agree progress milestones
with the Senior Responsible Owner, whose pay and performance bonuses
should be directly linked to performance objectives and programme
delivery. Every project should have objective targets and progress data so
that any corrective action can be triggered quickly.
xiv The implementation of the single payment scheme was subject to four
Office of Government Commerce Gateway Reviews between May 2004
and February 2006, and three of these Reviews assessed the programme
as “red”.
Development work on the computer system neverthelesscontinued and no contingency plan was invoked, despite limited
confidence that the system would be ready on time. If ‘red’ reviews are to be
taken seriously, departments need to be explicit about the circumstances in
which they would lead to fundamental review or termination of a project.
xv We are disappointed that it took the present Accounting Officer, Mrs
Helen Ghosh, nine months to provide the Committee with a full account
(in the form requested) of the total cost to public funds of removing Mr
Johnston McNeill from office as Chief Executive of the Rural Payments
Agency and from employment as a civil servant.
We expect AccountingOfficers to show better co-operation with such requests by the Committee.