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Extract from

House 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 single

payment 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 be

settled. 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 and

government bodies more widely.

i. 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. It selected the ‘dynamic

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 on

agency 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


iii Implementation of the project started before the specification of the

single payment scheme was finalised. The aim was to meet the March

2006 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 scheme

was 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 computer

systems 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 a

task 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 lines

provided 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 key

information 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 partial

payments 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 of

claims 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 making

as 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 feasibility

of 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 Senior

Responsible 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 nevertheless

continued 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 Accounting

Officers to show better co-operation with such requests by the Committee.




























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