Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 140-159)



  140. What I just do not find acceptable is that having asked for a number you did not do something with that number, there and then, that would, there and then, enable you to identify that it was a fictitious number.
  (Mr MacKinnon) All of the numbers used by Mr Bowden were the numbers that appeared on his map on the farm, so if he said the field was 4568 the farm plan would show 4568.

  141. I am talking about what is done with the number once the department gets it. How could it be that once you had got the number you did not do something with the number that related to this unique system that Mr Bowden had, which is referred to in paragraph 3.6: "Mr Bowden devised a unique numbering system of Ordnance Survey grid references for locating some of his fields" and we have heard that they were in Iceland, Greenland and so on. I just do not understand once you had captured the number, the information, how it was that you could not use that information to find out that they were fictitious grid references .
  (Mr MacKinnon) What we should have done was check the whole number against the IACS database. That would have shown the non-existence, if you like, of the early part of the identification series, the two letters and the first four digits that were wrong.

  142. It is so obvious. It is like asking for a bank account number but only asking for the last two digits. Is it not just obvious that you do that?
  (Mr Bender) It is even more obvious that there should have been cross checking.

  143. Going back to Mr McNeill's point earlier when you said that substantial resources would be required to do this. £16 million sounds a reasonable amount to me. If you go on to a website now you can type in a postal code and up will come the exact grid reference down to six digits in each direction. That does not sound to me like it would require substantial resources, anybody could do it, you just phone up Ordnance Survey, do you not?
  (Mr McNeill) With respect, Chairman, that is where we intend to be by 2004, it requires £130 million to get us there. It is a substantial investment in new technology. You must bear in mind that we are operating at this moment in time with some very old legacy systems.

  144. Quite frankly you could do it with a quill pen.
  (Mr McNeill) A lot of this work has to be done manually and, of course, that incurs considerable expense where we have to do manual cross checks. You will notice in the report there were manual cross checks, to some extent, done at various stages but that is extremely time consuming and it is extremely expensive. We hope with the new systems we will be able to make changes to schemes and to do cross checking of this which will be much more cost effective in the future. We accept that, yes, this is not good, it is not the way that we wish to set up a scheme. The scheme rules were not good. The implementation, we accept, was not as good as it should have been and we have to agree with you, it is far from satisfactory.

  145. Mr Bender, in paragraph 2.24 it refers to the fact that in June 1996 checks were carried out on Mr Bowden's contracts and it was found that he had contracts with more than one contractor. Indeed, that he had supplied copies of the same map and had contracts with different contractors covering some of the same areas of land. That was in June 1996. But, as it goes on to say in the next paragraph ". . . it was not until early in 1997 . . ." some seven or eight months later ". . . that the claim . . . for Objective 5b monies, began to be investigated". Why, when it was clear that this man was a rogue, did not instantly something get triggered that said "Hang on, we have got this rogue, let us check everything we know about him in relation to any scheme"?
  (Mr Bender) It should have been, I accept that. Repeating my earlier point, because he had not actually submitted a claim some of the controls had not been triggered, that I agree. The NAO Report itself recommends that there should be much sharing of data across the organisation.

  146. The second claim, 5b, should not have been required.
  (Mr Bender) I accept that.

  147. Concerning the overall department, I did not write down the answer earlier about the question of the total number of prosecutions, I am not sure I heard the answer. Mr McNeill I think said sometimes administrative penalties short of criminal prosecution were appropriate. How many prosecutions were there?
  (Mr McNeill) We undertook to write to you with the details of that.

  148. Again, this report here refers to the fact that between 1993 and 1997 there were only seven prosecutions of which six were successful. I think if you are able to, when you write to us, could you do a grid breaking down the number of instances, the number of investigations, the number of prosecutions, how many were successful?
  (Mr McNeill) I have actually just been supplied with the data if you would like it now.

  149. Well, if you can give it now, great.
  (Mr McNeill) I can only give from 1997 to 2001 or shall I write to you?

  150. No, give us it now.
  (Mr McNeill) 1997, 130 investigations, seven prosecutions. 1998, 123 investigations, nine prose- cutions. 1999, 98 investigations, four prosecutions. 2000, 137 investigations, two prosecutions. 2001, 76 investigations, zero prosecutions to date.[10]

  151. It does not sound to me like a whole bunch of prosecutions, does it really? It is a trend we have found with a lot of different departments, Benefits, Ministry of Defence and your Department. It seems to me despite large numbers of investigations there is a very small element of prosecution. I go back to the deterrent point and ask you to look very carefully at whether you ought to do more prosecutions in order to have a greater deterrent effect. I would like to ask you another question about your department. It is more general than this hearing but it relates to the administrative effectiveness of your department and that is to do with correspondence. The department wrote to all MPs not so long ago apologising for the poor state of correspondence. I checked with my secretary this morning, representing a rural constituency I correspond with DEFRA quite a lot, and I have a letter outstanding from October—

  Mr Osborne: You are lucky!

  Jon Trickett: Which year?

  Mr Bacon:—that is not uncommon. There are pieces of correspondence outstanding for many, many months. Among many people in my constituency, and in fact among many MPs, DEFRA is a byword for administrative incompetence. What do you say to that? When will your correspondence be back on an even keel?
  (Mr Bender) First of all, can I repeat the apology my Secretary of State gave in the letter she wrote. It is deeply regrettable, it is not something we are proud of. I think in her letter she explained the circumstances in which it had arisen. I do not think I would like to give you a definitive date but we are working on it extremely hard in the department. I hope in the very near future we will be back on track so that current letters are replied to within the service standards deadline, or at least the vast majority of them, and there are no long outstanding ones. I am taking very regular meetings in the department on this issue. It is a matter of deep regret and I apologise, as my Secretary of State has in the letter she sent.

  152. When we had Professor Likierman before us talking about resource accounting, your department was also flagged up as being one of the most laggardly in terms of implementing resource accounting. Am I right in saying you have a qualified set of resource accounts?
  (Mr Bender) That is correct. I had expected to be asked about that in the likely appearance that I will be making later this year on foot and mouth disease because one of the reasons for the qualification is connected with the handling and complexity of foot and mouth disease. I have recently changed some of the structure and people in my finance directorate, including a qualified accountant as deputy director with the specific aim with his appointment to get on top of this issue of resource accounting.

  Mr Bacon: Chairman, thank you very much.


  153. Arising directly out of Mr Bacon's questioning, he referred you to the Twenty-Fifth Report of the PAC session, 1998-1999, and he was making a suggestion—and actually it is question I think I would like to ask of the Deputy Comptroller and Auditor General—that recommendations of this Committee have apparently not been picked up or followed properly by the Department. I do see in paragraph two of your report that it refers to "Previous reports by the Committee of Public Accounts on Common Agricultural Policy schemes have emphasised the importance of rigorous action in the case of irregular and fraudulent activity". I do not recall, or my colleagues do not recall, seeing in your briefing to us or in this report any mention of this matter that my colleague raised. Is this a fair question to you and does it not underline the importance of us all following up the recommendations that are made and keeping the departments up to speed?
  (Mr Burr) I think the recommendations were accepted but the question is whether they were followed up.

  154. I think it just underlines a very important point and I am sure my colleagues would like to emphasise that just because we receive a Treasury minute that says the department has accepted the position does not mean that we should rest on our laurels and not pursue them.
  (Mr Burr) Indeed not.

  Chairman: Thank you very much. Barry Gardiner.

Mr Gardiner

  155. Mr Bender, we have had in many respects a strange and almost humorous, rather surreal session this afternoon. Can I ask, the staff member who initially tipped the wink on Mr Bowden, because they remembered he had been under investigation in a previous department, what has happened to that staff member?
  (Mr Bender) I do not know. I will look into that. I do not know if any of my colleagues know. Clearly he did a very good job in remembering that and it is a pity it was not more systematic in the organisation.

  156. Indeed. I think it would be good if some sort of commendation or recommendation was given. Can I just press you further on this business of the systematic way in which the department did or did not work. Can I ask you is there any perceptible percentage shift over the past five years in the number of cases that are taken to prosecution that have come about either through tip-off on the one hand or through your normal course of investigation on the other? What I am trying to get at is are you still actually as reliant on tip-offs as you have been in the past or has there been a change?
  (Mr Bender) Can I first answer a question you did not ask, if you will allow me. The systemic arrangements are of course intended to remove a loop hole that would allow someone to be fraudulent. Those are the systemic changes which have been introduced progressively since 1995-1996. I think on your specific question, unless Mr McNeill has the data, it is something we will have to include in the subsequent material to the Committee.[11]

  157. If you can provide me with a written note that is fine. Now Joseph Bowden, Jo Bowden Farm, JSB Farms, J Bowden and Sons were all aliases that this fraudster operated under. What I am trying to get at is are farmers who apply for subsidy now still able to use different commercial names? I have no doubt that farmers quite legitimately do have different commercial names but it seems to me that in so far as that is a potential source of confusion in administering the system they should not be allowed to apply for subsidy except under one sole name. Is that in fact the case?
  (Mr McNeill) Yes, the current regulations are far from satisfactory and our intention is to introduce a single business identifier which means that any customer dealing with us in regard to a farm or a particular field must use a single identifier. By that means we would hope to avoid this happening. As you say, there are legitimate cases where, in fact, you could have a limited company and you could have a father and son working as sole traders, etc., so there are a number of issues in there which we have yet to iron out. It is not as straightforward as one might imagine. It is a piece of work we have started on.

  158. That was a response that started with a yes and I think ended up with a no.
  (Mr McNeill) Yes by 2004, no at the moment.
  (Mr Bender) We do not have a satisfactory situation in the department or in the RPA across the department on databases. We have several and we need to get it down to one single business identifier.

  159. What I am seeking to establish is that at present farmers can, and still do, make applications under different names. The promise that you are giving to the Committee is that by 2004 they will not be allowed to make applications under different names.
  (Mr McNeill) We have not taken a final decision on that yet, there is a lot of work to do. If they are allowed to make applications in different names we will make sure that we can cross-reference them to identify them in regard to the piece of land they are making an application for. To do that we are creating a land register which is a digital database of 1.7 million parcels of land. That will enable us to identify if the father and son as sole traders are making applications, are they a limited company, if by using different names they are making multiple applications. That will assist us in that area. We also intend to try to get them to move to a single business identifier.

10   Ev 26, Appendix 1; and Ev 30, Appendix 1, Annex A. Back

11   Ev 26, Appendix 1; and Ev 30, Appendix 1, Annex A. Back

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