MPs blast farm payments fiasco

The multi-million-pound bungling of the farm payments system will be branded a “master class in bad decision-making” by MPs in a damning report today.

Farmers in England were left waiting for months as almost £1.5bn in delayed payments caused acute financial problems and distress for every sector - and some Norfolk farmers are still waiting to be paid in full.

Edward Leigh, chairman of the Commons Public Accounts Committee, was stinging in his criticism of the top ranks at Defra, including then environment secretary Margaret Beckett.

“The single payment scheme is relatively small, but its implementation last year to a near-impossible timetable was a master class in bad decision-making, poor planning, incomplete testing of IT systems, confused lines of responsibility, scant objective management information and a failure by the management team to face up to the unfolding crisis,” Mr Leigh said.

“The story of the inept handling of the scheme should make a richly rewarding study for senior civil servants across the whole of government for some time to come.”

According to the MPs' report, Defra spent £122m to implement a highly-complicated new payment scheme for farmers in England while Wales, Scotland and Northern Ireland all opted for tried-and-tested solutions.

The decision by Mrs Beckett, later promoted to foreign secretary, to opt for the so-called dynamic hybrid scheme was the first stage in what was described as a “train wreck” about to happen.

There was no plan to exclude claimants for less than e100 or £66 - a policy adopted in Germany - encouraging about 14,000 extra applications.

The decision to merge 11 schemes into one in a single year saw the total number of claims rise from 70,000 to 116,000 in 2005 when the computer system was untested and there were inadequate digitised maps.

At the same time as introducing the new payment system, Defra's ministers agreed to cut staff numbers by 1,800. This cost £258m and is only likely to produce efficiency savings of £7.5m by March 2009.

Mr Leigh said: “The delays in paying grants to farmers left a significant minority stressed and in a financially precarious position.”

He added: “This was a highly risky project from the outset but the agency's chief executive recoiled from confronting his Defra bosses with reality. Johnston McNeill paid the price for what happened but the then permanent secretary of the department, Sir Brian Bender, bears a large part of the responsibility.”

Neither Mrs Beckett nor Sir Brian gave evidence to the committee, which wrote a 66-page report into the payment delays. The failure to make payments in time led to a fine of £131m by Brussels for Defra's failure -a further burden to the taxpayer.

While Johnston McNeill, the former chief executive of the Rural Payments Agency (RPA), was dismissed by Mrs Beckett in March 2006, he remained on gardening leave for 220 days until December 1. He received total compensation of £218,701 including £60,792 from the Civil Service Appeal Board for unfair dismissal.

Meanwhile, farmers in Norfolk still have unresolved claims including Tony Bambridge, of the arable and seed-potato enterprise, B & C Farming, of Marsham, near Aylsham.

He said there were major problems when he got through to the management unit of one RPA office. “Its computer software doesn't now talk to the software that the team making the payments are using. So they've had to make a manual payment.”

And while farmers were kept waiting for payments, many claimants with small sums got paid much more quickly. Ken Leggett, who looks after the five-acre Buttercup Meadow in Old Catton, Norwich, has just received his latest payment of £62.74 plus a rebate from the previous year of £2.64 - in two separate envelopes.

Henry Bellingham, MP for North-west Norfolk, who was asked for help by several of his constituents, said: “It has been a complete shambles. It just beggars all belief.

“It really has been a fiasco and totally avoidable.”

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HIGHLIGHTS OF THE SELECT COMMITTEE'S REPORT ON THE RPA

t Defra did not specify a minimum claim size unlike Germany, which applied a e100 (£66) minimum. As a result, 14,000 additional claims were made.

t The RPA's 4,000 staff had to deal with 116,000 claims - about 30 applications per staff member, said Edward Leigh, chairman of the Public Accounts Committee.

t “It cost the RPA about £1,000 - as much as £2,000 if we include the wider business restructuring costs - to process every claim” - Helen Goodman, MP.

t “Sir Brian Bender (Defra's permanent secretary) was on a rope bridge across a ravine. They could see that in front of them the rope was giving way and bits were not holding together, yet the decision at each stage when there was a decision to take was to press ahead” - David Curry MP.

t “It was their (minister's) decision to go for the dynamic hybrid system” - Helen Ghosh, Defra's current permanent secretary.

t “One year, Johnston McNeill (former RPA chief executive) does so well, he is given a bonus; the next, he is out on his ear because he has lost the confidence of ministers” - Greg Clark, MP

t To Helen Ghosh: “I notice that you have been in post since November 2005 and in 1995 you were in the Cabinet Office efficiency unit. Did you learn anything?”

t “The original IT scheme was intended to cost £27.5m. It eventually cost over £50m, almost doubling the cost” - Alan Williams MP.

t Did you meet environment secretary Margaret Beckett?

Johnston McNeill: “I met her only twice during my time at the Rural Payments Agency.”

t “It was a slow-moving train crash” - Edward Leigh.

t Richard Bacon MP: “Is it the case that farmers are expected to pay tax on money that they have not received?”

t Defra is a word in Welsh, did you know?

Mrs Ghosh: “What does it mean?”

Don Touhig: “It is spelt slightly differently because we Welsh like slightly more Fs in our words but it means wake up. Is that not what you have to do?”

Mrs Ghosh: “We have to wake up? We have woken up.”

t Was there any indication that ministers and senior officials had lost confidence in you?

Johnston McNeill: “It was a bolt out of the blue. I have had box- one markings in my time as a chief executive in government. That is 'outstanding'. I have had my bonus awards in full. There was never any discussion or correspondence about my performance mentioned in either informal bilaterals with permanent secretaries or otherwise.”

t David Curry: “We have discovered a wonderful consensus that you were to blame for it all.

Johnston McNeill: “I have noticed that myself.”

“Train crashes do not happen by spiritual invention; they happen because something goes wrong. The signals were working, the engine driver, firemen and guard were there, the lamps were working and even the ticket inspector was on the train, but it crashed” - David Curry.

t “On cost over-runs, we started out to build a three-bedroomed house but it became a five-bedroomed house” - Johnston McNeill.

t “As I understand it, the system worked but payments were made at a rate of 10 a week when 1,000 a week was needed. The system worked but the difference was like that between buying a Ferrari or a Model T Ford” - Philip Dunne, MP.

t England uniquely chose the most complicated system - the so-called dynamic hybrid in the first year, 2005. As a result, the number of claimants rose from 70,000 in 2004 to 116,000 in 2005.

t England had no digital mapping system up and running unlike Wales and Scotland in 2002. So when farmers submitted 2.1 million parcels of land instead of an estimated 1.7 million, it blocked the system.

t Defra ministers agreed to make 1,800 staff redundant and then had to spend £14.2m on hiring agency staff.

t “Could I ask about the decision to pay interest to farmers at such a low rate and at such a late stage? Who made that decision?” - David Miliband, then environment secretary, now foreign secretary.

t “The RPA had a target to reduce its headcount by 1,000 posts. At March 2006, you had 1,351 temporary staff and 838 casual staff” - Greg Clark, MP.

t For the full report see www.parliament.uk/pac