Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Memorandum submitted by the Department for Environment, Food and Rural Affairs




Question 1

  How have differences in pay and conditions between former MAFF and former DETR staff been addressed, at what cost, over what timeframe and how have the changes been resources?


  In August 2001 interim terms and conditions were introduced for ex-MAFF staff and new staff joining DEFRA. Ex-DETR staff retained their existing terms and conditions in accordance with the principles of TUPE.

  In March 2002 the PCS union accepted a revised offer for the MAFF 2001 pay award. The settlement, which included an element of assimilation, was implemented with effect from 1 August 2001 and led to an above average pay settlement for ex-MAFF staff. The settlement has, to a certain extent, reduced the pay gaps between former MAFF and DETR staff in the Department although some still remain, in particular at the lower levels.

  The full cost of the award was 24.4 million of which we estimate that a little over 9 million was about what an average award would cost. This was funded by efficiency savings within the paybill and the transfer of internal monies from programme to administrative budgets with Treasury agreement.

  Work had already started in MAFF, by the Joint Pay Review Steering Group (JPR), on the development of a new pay system to respond to the requirement placed on Government Departments to review and modernise their pay systems. The work has been carried out in partnership with the unions. This work has been carried forward by DEFRA and is providing the foundation for the development of a common pay structure for all staff in DEFRA which we aim to put in place this year.

  Work is also on going, again in partnership with the unions, to develop common conditions for staff in DEFRA. It is the aim to have these conditions in place by April 2003.

Question 2

  Explain the role and function of the Non-Executive Members of the Management Board, with examples of their contribution.


  The Non-Executive members provide a different point of view and help the DEFRA Board to learn from the experiences of other organisations. They play an important and effective role in challenging the Board's thinking and helping the Board to take a more corporate and strategic view. And they bring to the Board specialist knowledge in change management and improving performance. As well as contributing to the discussions at the Board's fortnightly meetings, the Non-Executives are also involved in other Departmental activities. For example: Elizabeth Ransom is a member of the Board's e-Business Sub-committee and has been helping steer the Department's change programme; and Alison Huxtable will be chairing the Audit and Risk Sub-committee.

Question 3

  What has the turnover of staff been since DEFRA was formed?


  Since the formation of DEFRA on the 16 June 2001, the average turnover has ranged from 18.7 per cent in the lower grades to 1.5 per cent in the higher management grades.

  The average annual turnover figure across all admin grades as at May 2002 is 9.2 per cent (ie for the period June 2001 to May 2002).

  The corresponding figure from June 2000 to May 2001 in ex-MAFF is 10.5 per cent.

Question 4

  How many former MAFF staff are on the DEFRA Management Board?


  Six. Brian Bender, Jim Scudamore, Andy Lebrecht, Kathryn Morton, Brian Harding and Lucian Hudson (who joined MAFF in April 2001).

Question 5

  What difficulties have there been with the recuitment and retention of staff in the regional offices of DEFRA?


  Overall numbers of permanent staff leaving the Rural Development Service (RDS) in the last 13 months have not been high. In the period 1 April to 31 December 2001, for example, 30 Administrative staff and 33 Technical/Cartographic staff left the service, most of which left in the early period of the creation of the Service. This is less than five per cent of the RDS permanent workforce. Whilst these numbers are low in comparison to previous MAFF regional figures, the competitive process by which administrative staff were appointed to RDS in April 2001 would undoubtedly have assisted retention.

  Budgeting constraints has meant that very little recruitment has taken place recently. In the previous year no problems were seen. Application levels for vacant Technical posts were high and with the downsizing of DEFRA sites under the Regional Re-organisation plans, all Administrative posts within RDS had to be advertised, and where possible filled, through Resettlement Action. The majority of Administrative posts were filled easily by this action.

  The formation of RPA in 2001 and consequent restructuring has led to a general downturn in permanent recruitment across a range of offices. This is a logical consequence of the planned reduction from 3300 to 1950 staff. Retention of staff in offices that are downsizing and/or closing could present problems in the future as the reorganisation accelerates. To counter this, annual continuity payments are being made to staff to encourage them to remain in post until the reorganisation is completed. Turnover remains low and a recent staff survey has shown common ground between downsizing and permanent sites within the organisation.

  In the SVS there have been continuing difficulties in recruiting, and to a lesser extent retaining, staff in regional offices located in the South East of England. High costs of living and more competitive salary packages offered by other employers have made it difficult to recruit into administrative, technical and veterinary grades in this part of the country.


Question 6

  (i)  What steps have been taken to strengthen the financial management systems of the new Department in the light of the criticisms of the MAFF resource accounts for 2000-01 made by the Comptroller and Auditor General. How have the accounting functions and systems of the two departments been merged? How has the progress to resource accounting been handled?


  What steps have been taken to strengthen the financial management systems of the new Department in light of the criticisms of the MAFF resource accounts for 2000-01 made by the Comptroller and Auditor General?

  The audit of the accounts of the former MAFF for 2000-01 resulted in a disclaimed audit opinion. The audit report of the C&AG, which was included in the Resource Accounts was followed by a rather fuller report, presented to Parliament that set out in a little more detail the circumstances which led to the adverse opinion.

  Given that compilation of the 2001-02 accounts will have only got underway after the actual year end; and that the C&AG report was only completed in March, there are limits to the extent to which changes recommended as a result of the 2000-01 audit could be put in place for 2001-02. However the following changes have been put in place for 2001-02:

    —  Greater clarity in roles and responsibilities together with more formalised project management disciplines.

    —  The provision of specialised accounting support to budget holders and finance staff in business areas.

    —  Procedures for formal QA of the accounts before submission to the NAO.

  Whilst the changes offer no guarantee of DEFRA securing an unqualified audit opinion, it is evident that we are much further forward on compilation than this time last year. It does also seem that the key issues have been isolated and that there is scope for devoting extra resource in these key areas to improve the quality of financial information submitted for NAO scrutiny.

  Aside from taking forward issues from 2000-01, there are changes over the 2001-02 reporting period which will need to be taken into account. The most significant of these are the Machinery of Government changes which led to the creation of DEFRA in June 2001; and the launch of the RPA in October. Resource Accounting rules require us to handle these changes as if they had been in place all year: and to then restate the prior year figures on the same basis. This is a significant job of work. Whilst we are confident that colleagues in DTLR and RPA will be able to provide the necessary material to enable DEFRA to report the 2001-02 position correctly, the task is not straightforward. It is therefore certain that NAO will spend considerable time assessing our reporting of the MoG changes.

  Given these difficulties—FMD, Machinery of Government and the issues of wider financial management raised on the 2000-01 account—there must be a continuing risk that NAO will find grounds for qualification. But with the improvements in place we would hope any qualification would be based on the less serious "limitation of scope" opinion rather than the disclaimed opinion given last year.

  With this risk in mind effort will be concentrated on ensuring that the Balance Sheet as at the end of March 2002 is reasonably "clean". This will enable us to move towards the production of unqualified accounts for 2002-03. At the same time a programme of work is now underway to fully embed resource accounting in DEFRA and to link improvements in financial management with other planned improvements in business planning and risk management.

  (ii)  How have the accounting functions and systems of the two departments been merged?

  As the creation of DEFRA took place part through the financial year and the structure of the new department was not finalised until October 2001, it was decided that the merger of the two finance functions and associated accounting systems should be deferred until April 2002. In the interim, day to day transaction processing for former DETR areas were handled by the DTLR system; and for the former MAFF areas by MAFF/DEFRA systems. The accounting information held by the two systems were then brought together for corporate and statutory reporting purposes by DEFRA's Finance teams.

  Work to bring about a merged accounting and reporting system for the whole of DEFRA was successfully concluded in time for the start of the 2002-03 financial year.

  (iii)  How has the progress to resource accounting been handled?

  NAO have been critical of the lack of progress in implementing resource accounting in the former MAFF. To help address current shortcomings, a programme of work is underway to embed resource accounting principles across DEFRA. The aim of this programme is to put in place a series of financial policies, procedures and systems that will enable the department to improve its planning and control over the financial resources at its disposal. The scope of the programme is fairly wide ranging but includes the strengthening of skills and resources in the central finance function, process and system improvement, and the roll out of a new finance training strategy.

Question 7

  What steps has the Department taken to increase the budget available to the Environment Agency on flood defences to meet its identified needs?


  This Department provides grant (and Supplementary Credit Approvals to local authorities) to the Environment Agency, local authorities and Internal Drainage Boards for flood and coastal defence capital works in England. The total provision available, and the Environment Agency's share of it, is increasing as shown below:


Provisional Outturn







Of which Environment Agency



Not yet allocated


  The provision available for 2003-04 will be allocated to authorities later this year.

  The other main source of funding for the Environment Agency are levies paid by local authorities. The figures are as follows:

million 2001-02






To be decided in early 2003


  DEFRA commissioned research on the National Assessment of Assets at Risk from Flooding and Coastal Erosion and indicative results were published last year. DEFRA has asked the operating authorities to take the results into account in their forward planning; but it is the case that capital flood and coastal defence works can have lengthy lead times and the operating authorities will need time to build up increased programmes. The level of Central Government funding for the next three years will depend on the outcome of the Spending Review.

Question 8

  Does an IT strategy for the new department exist? If so, what are its key features? How has the proposed outsourcing of IT delivery progressed?


  DEFRA's e-Business Strategy was published in October 2001 and received a good rating from the Office of the e-Envoy. It described DEFRA's vision for transforming itself into a fully joined-up and customer service focussed e-business with all of its key services capable of being delivered electronically by 2005. It is based around over 100 e-business projects, cross-cutting initiatives such as creation of a Single Business Identifier for all customers interacting with DEFRA and includes over-arching technical policies. The primary focus is on three major initiatives:

    —  The Rural Payments Agency, concerning major business change and electronic delivery of all services supporting the Common Agricultural Policy.

    —  The British Cattle Movement Service, already delivering electronic services, with good take-up.

    —  Rural Development Service, again major business change with wholly new IT infrastructure and services.

  Strategy implementation is being overseen by the e-Business Sub Committee of DEFRA's Management Board against a background of increasing devolvement of responsibility for IT systems to related business areas.

  A fuller IT Strategy is expected to be developed, incorporating the existing e-Business Strategy. This will also cover how the e-Business solutions are to be delivered. The new IT strategy will need to address IT investment policies, a procurement strategy and the necessary IT governance arrangements within the department, including for overseeing cross-cutting developments.

  The decision to proceed with IT outsourcing was made in January 2002, after an Office of Government Commerce Gateway 0 Review. This Gateway 0 Review concluded that DEFRA's outsourcing plans were achievable; and that time should be allowed in the next stage to build up the team, define the scope, and prepare for the procurement. DEFRA has appointed an interim IT director with experience of outsourcing, and built up a mixed internal/external team which is actively addressing all these areas. DEFRA is getting help from a number of sources, including PA Consultancy and the Inland Revenue, which has substantial experience of outsourcing. Particular attention is being focussed on human resourse aspects. The programme is expected to lead to a business case and procurement strategy for Office of Government Commerce Gateway 1 and 2 reviews in the Autumn and formal launch of the procurement stage towards the end of the year. DEFRA might expect to have new contracts in place by early 2004.

Question 9

  Provide estimates and out-turn figures for 2001-02 to include former DETR functions.


  According to the latest figures available DEFRA's provisional outturn for last year, compared with the DEL Budget, including ex-DETR figures, is as follows:






Total DEL










  The outturn figures are provisional only, and will be updated later. At present they do not account for all of the inevitable and necessary end of year adjustments. These changes may result in a significant increase in outturn.

  The Departmental Expenditure Limit (DEL) Budget covers DEFRA's administrative costs, capital expenditure, as well as expenditure on grants funded by the Exchequer. It, however, excludes non-DEL items in the Department's Estimate, such as EU funded CAP measures and, certain capital charges, which are classified as Annually Managed Expenditure (AME).

  The above Budget and Outturn data represent DEFRA only, ie ex-DETR and ex-IB as well as ex-MAFF, and do not include Forestry Commission figures.


Question 10

  Reflecting on the experience of foot and mouth, how has the science function of the Department established stronger relationships with both other Government science agencies and the external scientific community?


  The creation of DEFRA brought together a range of important science functions, and within our overall change programme we are giving special attention to raising the profile of science.

  We appointed Professor Howard Dalton FRS as our new Chief Scientific Adviser, to lead this process.

  We have now identified what changes we need to make to our science procedures and systems, and are embarking on a programme of significant change to deliver them. Our principles and objectives will be published shortly, in the form of an interim Science and Innovation strategy.

  Another major review, which touches on our relationships with both other capital Government science agencies and the external scientific community, is the review of DEFRA's three science agencies (including the Veterinary Laboratories Agency). This is currently due to report in October.

  Howard Dalton is on the Councils of both the Natural Environment Research Council and the Biotechnology and Biological Sciences Research Council, and is actively engaging with those organisations and how we can build stronger relationships in the future. Lord Whitty has also recently met with both organisations.

  At a more specific level, a number of activities specifically linked to the FMD episode are in hand:

    —  DEFRA is represented on a BBSRC committee chaired by Professor Gull, which is looking at how DEFRA and the BBSRC can work together to manage the role of the BBSRC Pirbright Laboratory;

    —  We have established a joint working group with all other key interests—including OST, BBSRC and the devolved administrations, to begin preparation for follow up work on the Royal Society inquiry chaired by Sir Brian Follett;

    —  We held a modelling workshop on 23 May, bringing together modellers together with veterinary and infectious disease specialists, and members of the state veterinary service, to establish the basis on which to co-ordinate research on future modelling requirements.

Question 11

  What concrete steps have been taken to improve the effectiveness and efficiency of regulation that is the responsibility of the Department while reducing their burden on the sectors regulated?


  Some regulation is unavoidable if the Government is to safeguard public and animal health, the environment and public funds, but our aim is to keep regulation to a minimum. We have a long-term strategy (2007) to introduce risk-based regulation to all sectors including agriculture. New risk assessments, standardised permits, better reporting arrangements etc. will keep charges down and reduce the bureaucracy of regulation.

  To minimise the burden of regulation on farm businesses we have implemented the majority of recommendations in the report of the Better Regulation Task Force of environmental regulations and farmers published in November 2000.

  More recently the Government's Regulatory Reform Action Plan, published in February 2002 identified 268 areas for reform across Government, including 59 entries covering all aspects of DEFRA's responsibility. Many will be completed over the next two years but others are longer term. Policy divisions are encouraged to make full use of powers under the Regulatory Reform Act 2001 aimed at speeding up the reform process.

  We have also convened a cross-cutting Steering Group on the Regulation of Agriculture. This is chaired at Director-General level, reports to the Management Board, and brings together representatives from across Government whose activities affect farmers and growers. This Group first met in May and has embarked upon an ambitious programme of work designed to develop a smarter approach to regulation that concentrates upon outcomes rather than processes, and embeds good practice into everyday farming activities.

  One way this programme will be taken forward is by developing a whole farm approach to regulation in the agriculture and horticulture industries. This is a long-term strategy (seven to 10 years) to integrate different government contacts with farm businesses in order to reduce costs and burdens while improving outcomes. This approaches raises a number of complex technical, data protection and privacy issues which we will need to resolve in liaison with stakeholders and farming industry representatives.

Question 12

  The rural affairs functions of the Department require considerable partnership working with other departments. Give examples of how this is being done.


Empowering parish and town councils

  We have been working closely with other government departments and representatives of local government in taking forward the Rural White Paper commitment to help parish and town councils develop a new role in order to give local power to country towns and villages:

    —  We produced the consultation paper on Quality Parish and Town Councils, published in November 2001, as a jointly badged document with the then Department for Transport, Local Government and the Regions (DTLR), the Countryside Agency, the Local Government Association (LGA), the National Association of Local Councils (NALC). We are currently considering the responses to the consultation with the (now) Office of the Deputy Prime Minister (ODPM). We shall be reconvening the working group on which the CA, LGA and NALC are represented to take forward work on the detailed guidance on the operation of the Quality Scheme

    —  Together with the ODPM, LGA, the Society of Local Council Clerks and training experts, we are represented on the Steering Group which has helped NALC and the CA establish a national training strategy for parish and town councils. The strategy was published in November 2001, is now being piloted and is expected to be rolled out nationally in the Autumn. A key aim of the strategy is to ensure town and parish councils can get access to advice, training and support so that they have the ability to meet the standards to become Quality councils.

    —  In co-operation with the then DTLR we worked with NALC and the LGA to produce good practice guidance on the financial arrangements between principal and parish and town councils, published in May. NALC and the LGA conducted a trawl of their membership for information on how they were tackling the problem of double taxation and examples of best practice. The excellent responses from principal authorities and local councils giving detailed accounts of how they have sought to resolve the problem have been used as case studies in the guidance note. The guidance will be incorporated in the guidance on the operation of Quality Parish and Town Councils.


  As a member of the Housing Corporation's rural advisory group we contributed to the development of the Housing Corporation's rural policy set out in its Statement published in October 2001. The document is the Corporation's response to the Rural White Paper and sets out how the Housing Corporation will contribute to the sustainability and regeneration of rural areas and the provision of affordable housing. The new policy takes account of the current context of rural England and the Government's priorities as well as the Corporation's experience of running a special rural programme since 1989.

  We continue to be represented on the Corporation's rural advisory and rural practitioners groups which bring together the views of rural stakeholders, the Countryside Agency, local authorities, registered social landlords and the Country Land and Business Association.


  Alun Michael is on the Ministerial committees for both the Sure Start programme and the Connexions Service, and officials in both DEFRA and The Countryside Agency work closely together with DfES colleagues on developing these programmes to meet rural needs. Sure Start was one of the first major Government programmes to focus parts of its delivery on rural areas, and is a real trail-blazer in that respect. They have also taken an innovative approach to identifying pilot areas by using ward-level data to identify "rural pockets" for their round six roll-out. The Connexions Service is also making in-roads into addressing the specific needs of rural areas. In particular they are carrying out an effective practice study into the differential costs of delivering Connexions between urban and rural areas which is particularly welcome—especially as the rural evidence base is something on which we have, up to now, lacked solid information.


  DEFRA is working closely with DfT and other departments on improving rural transport and accessibility to services. The Social Exclusion Unit Study on transport is looking thoroughly at the interactions between social exclusion in rural areas and availability of transport. Alun Michael is a member of the Ministerial advisory group and the results of this study will inform future developments of policy. DEFRA, DfT, and the Countryside Agency are also working closely together to ensure that the rural transport initiatives they manage (rural bus subsidy, rural bus challenge, rural transport partnership fund and the parish transport grant) are working effectively together.

Question 13

  To achieve its target on recycling and composting of household waste DEFRA must work through local authorities. How is this being done? How is baseline and progress data verified?


  We expect all local authorities to contribute to meeting our national recycling target of 25 per cent by 2005. That is why we have set statutory performance standards for recycling and composting household waste for all local authorities—authorities are being asked, on average, to double recycling by 2003-04 and triple it by 2005-06. 1998-99 recycling rates were used as the baseline figures from which to set these standards.

  Waste collection authorities (district/borough councils) must a produce recycling plan to demonstrate how they will meet the targets. We also encourage waste disposal authorities (County Councils) to work with the collection authorities (district/borough councils) to produce joint Municipal Waste Management Strategies, and we issued guidance in March 2001 to help them do this. We encourage authorities to introduce new facilities and kerbside collection recyclables wherever possible, but under current legislation it is up to individual authorities to decide how best to meet their targets, according to local circumstances and we can't force them to create new facilities and schemes. But, we have provided a 140 million ring-fenced fund for local authority recycling initiatives and 220 PFI (Private Finance Initiative) credits for waste projects, and have increased the local authority Environmental Protection and Cultural Services spending block, which includes waste management, as a result of the 2000 spending review.

  In addition, the New Opportunities Fund is distributing 38.75 million of lottery money for community sector waste re-use, recycling and composting initiatives in England. WRAP (the Waste and Resources Action Programme) intends to work with local authorities to help disseminate best practice on recycling.

  Data from local authorities on recycling and composting is received via the annual Municipal Waste Management Survey, which every local authority must complete. Local authorities were closely involved in the national waste summit in November 2001. The Local Government Association are represented on the advisory board for the Cabinet Office's Performance and Innovation Unit review of the Waste Strategy.


Question 14

  What is the trend in unit costs and errors attributable to DEFRA staff of the cattle passports system?


  The British Cattle Movement Service (BCMS) starter operation in September 1998. Since then it has recorded its costs through the production of a Memorandum Trading Account and has measured and recorded the frequency with which errors are introduced in to the Cattle Tracing System by its staff.


  The Memorandum Trading Account takes account of all costs attributable to the Cattle Tracing System (CTS) both direct and indirect. Some of these costs can be controlled by BCMS others cannot. By dividing the total cost of CTS by the number of new birth registrations recorded a unit cost per new cattle passport can be calculated. The trend for this is:



Financial Year






Cost of issuing a passport






  Over this period, the work of the BCMS has changed with many more data validations being undertaken now than in 1998. BCMS also ran a "one off" project to gather details of all older cattle in the national herd during this period and this has added to the cost of ongoing business.

  In February 2001 BCMS launched a web based registration facility "CTS Online" which will help control processing costs. Electronic applications are processed at lower cost than those received on our paper forms. The cost of capturing the information from a paper form is 14p whilst the cost of capturing an electronic application made via CTS Online is 6p per application. For the recording of movements the cost difference is even more marked. The cost of recording a movement from a paper movement card is 31p while the cost of recording that same movement electronically is only six pence. The electronic application also has the advantage that the details input by the applicant are verified at source and both farmer errors and BCMS errors avoided. BCMS now receives 18 per cent of its applications electronically and is promoting greater uptake through roadshows and other training events.


  The most significant area where errors can be introduced by BCMS is during the initial electronic capture of data from the paper application form. In early 1999 the rate at which BCMS introduced errors, stood at one error occurring in 7.7 per cent of birth registration forms received. This has been reduced through training and system improvements to just under three per cent of forms having some form of error made on them. BCMS aims to reduce this to two per cent within this financial year. This error rate is already subject to independent audit.

Question 15

  List the contingency plans prepared by the Department to address animal health or environmental hazards and their last date of review? How have risks within the Department's brief been identified and quantified?


  Animal Health

  Core Departmental contingency planning for animal health exists at three levels.

EU Required Plans

  Under EU Directives for specific notifiable diseases, national contingency plans are required and the Directives lay down what those plans must contain. Such "EU Required" Plans exist for Foot-and-Mouth disease, Classical Swine Fever, Swine Vesicular disease, Newcastle disease and Avian Influenza. Further such plans are being prepared for Bluetongue, African Swine Fever and all specified diseases under EU Directive 92/119 (apart from SVD) The Classical Swine Fever Plan is being revised.

  These Plans are usually revised in terms of contact names and telephone numbers at regular intervals. However, the content is not revised unless the relevant EU legislation is amended to require a change in content.

Veterinary Instruction

  The next level of plan is the detailed instruction to veterinary staff issued centrally. These instructions exist for all the major notifiable diseases and other operational areas for which the State Veterinary Service is responsible. Many but not all are now available to staff electronically.

Local Animal Health Office Plans

  Finally, each Animal Health Office has a local contingency plan to deal with an outbreak of notifiable exotic disease, which is reviewed annually.

  Many of the requirements with respect to animal diseases for which we have a stamping-out policy have common components. For example the control of all such diseases will require the imposition of movement restrictions, valuation of animals to be slaughtered, the slaughter process, disposal of carcasses, tracing of animals, people, transport etc, to allow epidemiological work and prevention of spread.

Foot-and-Mouth Disease

  Following the Foot-and-mouth disease outbreak, DEFRA has developed an Interim National Plan for the disease which expands considerably on the requirements on the EU Plan. The Interim Contingency Plan builds on the existing plan and codifies experiences and lessons learned from the recent outbreak. However, it does not seek to pre-judge the results of the Official Inquiries. All plans will be comprehensively reviewed as a result of any recommendations made by the Inquiries.

  A draft of this plan was published for comment on 28 May 2002 and a revised version is on the DEFRA website. This Plan can be used as the basis for action for common areas of control for other notifiable diseases for which we have a stamping-out policy.

  As part of its on-going work on contingency plans for notifiable diseases, a Team is now working on elements such as:

    —  A review of the local Animal Health Office plans with the aim of providing a generic format.

    —  Development of the systems for augmenting staff resource from within DEFRA and other Government departments.

    —  Earlier involvement of stakeholders in the development of plans.

    —  The inclusion of risk-assessment and scenario planning in the development of plans (to include consideration of the economic, environmental and financial impacts of disease control).

    —  Devising a programme of regular testing of the plans through simulation.


  In April 2002 DEFRA's Risk Management Strategy was finalised. This outlines the main principles and processes that underpin the Department's approach to risk. It is available internally on DEFRA's intranet and externally on DEFRA's website.

Identifying risks

  The Department's approach to risk management is objective-driven. Risks are identified at the strategic level—those affecting the Department's objectives—and at lower levels—those affecting business plan objectives of Directorates or Agencies. The roles and responsibilities of managers and key individuals are set out in the strategy in the context of everyone having a part to play, particularly in identifying potential risks.

  The main types of risk that we seek to identify are:

Compliance risk

eg the risk of failing to meet government standards or laws and regulations, or failing to meet international treaties.

DEFRA "Family" risks

eg risks in NDPBs that would have a knock-on impact on DEFRA meeting its objectives.

External risk

eg risks from economic shocks, changing public attitudes or EU legislation.

Financial risk

eg risks arising from spending on capital projects or fraud or impropriety; risks from failed resource bids and insufficient resources.

Foresight risk

eg risks arising from insufficient forward planning or horizon-scanning.

Operational risk

eg risks associated with the delivery of public services; risks associated with recruitment difficulties or diversion of staff to other duties; risks surrounding IT systems.

Project risk

eg risks of equipment exceeding budgets or projects missing key deadlines.

Reputation risk

eg risks from damage to the organisation's credibility and reputation.

Risks arising from new ways of working

eg risks from joined-up working or change programmes.

Risks facing the public or the environment or animals

eg the risk of harm from pesticide residues in food or from an animal or plant health disease outbreak.

Strategic risk

eg risks arising from policy decisions or major decisions affecting organisational priorities; risks arising from senior-level decisions on priorities.

Strategic partner risks

eg risks experienced by our partners, such as local authorities or NGOs, that would have a knock-on impact on DEFRA meeting its objectives.


  We support our identification of risks through systems for gathering intelligence, most notably horizon-scanning (where we seek to identify new issues that may pose future risks to our objectives) and surveillance (where we seek to identify important changes to the health of particular populations).

  Once risks have been identified, we capture essential information about them in the form of a risk register. We maintain a central register of important risks, built up from information provided from each Directorate and Agency. The register is available on the Department's intranet. This is a bottom-up exercise. The Management Board fulfils a top-down role, reviewing the range of risks across the Department and identifying and addressing the Top Threats. Ministers are also involved in this process.

Quantifying risks

  To assess risks adequately we identify the consequences of a risk materialising and give each a risk rating. In coming to our assessment we consider the use of a range of available risk management tools and techniques, to help us appraise the various options.

  We recommend the use of Guidelines for Environmental Risk Assessment and Management, which describes general principles and provides case studies that demonstrate how environmental risk assessment and management processes can be applied across a diverse range of activities.

  We compare risks and concentrate on addressing those that are most important by using the standard approach of giving each risk a relative score, depending on a combination of its likelihood and its impact.

Question 16

  When is the next OGC Gateway review of the Rural Payments Agency Change Programme? Have any changes in terms and conditions altered the business case for change? What steps have been taken to reduce risk within the project? What is the current trend in unit costs of administering CAP payments? What appraisal has there been of current RPA performance?


  The next OGC Gateway (Gateway 3) review is scheduled for 9 to 13 December 2002.


  The Business Case was revised in September 2001 in the run up to the successful Gateway 2 review. There have been no material changes since then. The Business Case will be revisited before Gateway 3 drawing on the Best and Final Offers (BAFOs) of the three remaining suppliers.


  OGC complimented RPA on its risk management at Gateway 2. The Programme continues to actively manage risk. A risk register is maintained and reviewed monthly by a risk review team chaired by the RPA Operations Director. The Programme Board (Leadership Group) also review risks regularly. Active risk management has allowed RPA to maintain progress on the programme despite the impact of Foot and Mouth (FMD) and Industrial action.

Unit Costs

  RPA has established a baseline unit cost for administering CAP payments of circa 6p in the and the Secretary of State has submitted a report to the Chief Secretary. RPA continues to make good progress with its major Change Programme and is still on track to achieve a 40 per cent improvement on this figure once the new business systems are in place by the end 2004. RPA will monitor any "quick wins" as it moves towards this date and intends to award the systems development contract in December 2002.

RPA performance

  RPA's performance against its published 2001-02 targets is currently being validated and a report will be submitted to the DEFRA Permanent Secretary by the end of June. RPA has achieved much over the last year, in particular it has:

    —  undergone a successful launch in October 2001 and completed the subsequent abolition the Intervention Board in November 2001;

    —  been awarded full accredited status as an EC Paying Agency;

    —  provided a quick and effective response to the call for resources to undertake FMD related work, including work in control centres and in running the Livestock Welfare (Disposal) Scheme (LW(D)S) and its extension to include Light lambs;

    —  successfully negotiated OGC Gateway Review 2. OGC commented on the high standard of the RPA Change Programme that was "rated as being within the top 10 per cent of programmes reviewed";

    —  shortlisted three suppliers to develop its new business systems;

    —  successfully completed the first stages of its restructuring whilst maintaining business continuity, including closure of two offices and the movement of work between sites as part of the overall regional restructuring of DEFRA;

    —  established drop-in centres at all its sites to ensure that the visiting public are not disadvantaged during the current transitional period;

    —  made good initial progress towards restructuring "Operations", including the creation of Scheme Management Units and the management of new operational business within existing resources;

    —  successfully transferred the Grants and Subsidies payments system from DEFRA;

    —  made good progress with the Rural Land Register (RLR), including letting a contract to digitise the 1.7 million land parcels that are currently used in IACS claims.

  All RPA business areas have completed an EFQM self assessment and are being assisted by Quality Champions with a programme of action planning. A corporate self-assessment (undertaken by RPA's Leadership Group) provided an overall appraisal of RPA's current performance that is reflected in the presentation of its draft 2002-03 Business Plan.

  RPA's Industry Forum has met four times to provide a customer focused appraisal of business performance and input into the Change Programme. A more extensive telephone Customer Survey is scheduled for July 2002.

  RPA reports on its performance to two Board's chaired by the Permanent Secretary:

    —  The Agency Ownership Board provides a forum for the Chief Executive and his management team to be advised and supported by the Department and others with a major interest in RPA, including three external members with extensive business, industry and e-government expertise and representatives from the Devolved Administrations.

    —  The Regional Overview Board (ROB) provides strategic oversight to the implementation of DEFRA's Restructuring Programme and ensures that the benefits for customers and for the Department are fully realised. For RPA its remit is to ensure that Change Programme fits in with wider DEFRA initiatives. ROB includes representation from HM Treasury, Government Office and those parts of DEFRA affected by the Restructuring Programme.

  RPA's Audit Committee has been established to advise the Chief Executive on the discharge of his responsibilities as Additional Accounting Officer. Professor Georges Selim, who also is an external member of the RPA Ownership Board, chairs its quarterly meetings.

  As an EC Paying Agency, RPA continues to be under close scrutiny by the UK Certifying Body, EC Auditors and the European Court of Auditors (ECA).

18 June 2002


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