Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 200-219)

WEDNESDAY 6 MARCH 2002

MR BRIAN BENDER CB, MR JOHNSTON MCNEILL AND MR HUGH MACKINNON

  200. It says in this report that Mr Bowden has been farming since the 1970s. Do you have a figure for the total subsidy we have been giving Mr Bowden over the years?
  (Mr MacKinnon) I do not, no, I am afraid. We could give you a note.[13]

  201. It probably runs into millions, I would have thought.
  (Mr MacKinnon) Mr Bowden was not the claimant under the flax subsidy. He may have benefited from the money—

  202. He was being paid indirectly.
  (Mr MacKinnon) Our records would show the payment being to one of the contractors.

  203. You may find this person has been doing these scams for a long time.
  (Mr MacKinnon) We checked back on Mr Bowden right back to 1993 when the scam first became available to him through the IACS introduction and he had not been doing it before 1994.

  204. You did not check 1983 or 1973?
  (Mr MacKinnon) No, indeed.
  (Mr Bender) The scam he was doing only went back to 1994. We cannot answer your question whether there were other scams he might have been doing successfully undetected in the past.

  205. He could have claimed for two crops earlier. I do not know how long he had been growing flax.
  (Mr MacKinnon) There would have been no Arable Area Payments in the period before 1993.

  206. Can I turn to the Rural Payments Agency. I think it is a good thing from what I can see that this Agency is being set up but it has taken you four years to set up this Agency. I remember in my days in MAFF we had to set up things like the Over 30 Month Scheme in about two weeks but we managed.
  (Mr Bender) It is a major project which the Office of Government Commerce put as one of the top ten or dozen risk projects across Government because it involved the merger of two organisations, downsizing of staff, changing the culture within the organisations, new IT, keeping the service going the whole time and actually changing the customers' behaviour. Doing all that in three years or so will be no mean achievement.

  207. What do you mean by "changing the culture"?
  (Mr Bender) In two respects, and the Chief Executive may want to say something in a moment. First of all, we are merging the behaviours and culture of the Intervention Board with the former MAFF staff and, secondly, I think it is fair to say that the RPA needs to strike the right balance between an audit based, inspection based approach, which is the purpose of today's hearing, and also actually service delivery to customers. That is not an easy balance to do. Getting that culture right whilst obviously protecting taxpayers' money is part of the challenge.

  208. I see that Whitehall has finally won the battle to close down MAFF's regional offices.
  (Mr Bender) MAFF has joined in with the Government Offices in the English regions as far as rural strategy is concerned.

  209. I remember fighting that tooth and nail.
  (Mr Bender) Against it or for it?

  210. We were against it. The MAFF official position was to keep it.
  (Mr Bender) I have to say I was in favour of it when I arrived in the department. The Regional Service Centres that existed have been split essentially in three directions so that the people who deal with rural strategy have gone to the Government Offices, the people who deal with the agri-environment schemes are now part of the Rural Development Service merged with the former FRCA Agency, and the people who did the CAP payments have gone into the Rural Payments Agency.

  211. I remember the argument that MAFF used to deploy against John Gummer, who was the Secretary of State for the Environment at the time, that unlike other Government services MAFF services were by their nature rural and that was why you needed rural services. One of the things that has emerged from this report is how much this case relied on inspectors with a bit of local knowledge, the one who went back and remembered. Is there a danger that you are, in fact, centralising the MAFF structure so that people will be based in urban centres with actually little understanding of what is going on in the countryside with little local knowledge at all.
  (Mr Bender) The people who have gone into the urban centres, the Government Offices, are a small handful of people dealing with rural strategy generally where they need to work with the Regional Development Agencies and others in the Government Office. The people who are actually providing services direct to farmers are for the most part located either in Johnston McNeill's organisation for the payments or in what is now the Rural Development Services, the location of which has not changed other than the reorganisation that the RPA is doing. I hope the answer to your question will be, no, they will not lose the detailed rural knowledge.
  (Mr McNeill) We have retained some of the offices, of course. The offices at Carlisle, Exeter and Northallerton have been retained, as have the Intervention Board sites at Newcastle and Reading. We have still got those. We are looking at the ways in which the inspectors work. Many of them live in the communities so that they can operate effectively on the farms and premises around that area, so they are part of the community and very often are from a farming background with the need to identify crops, etc.

  212. Tell the difference between linseed and flax?
  (Mr MacKinnon) One would hope so, yes.

  Mr Osborne: Thank you.

Mr Steinberg

  213. Mr Bacon said he thought that the department was complacent and when I read the report I wrote that down in my notes, that the department appeared to be very complacent. He also mentioned about the mail and I was going to mention about the mail as well. I will not mention it now. However, I will just say that it takes two months for the department to tell an MP that the letter they sent has gone to the wrong department and they are going to pass it on. If that is what happens to MPs all the time then it seems to me that there is a systematic complacency about the whole thing. If I was in your position I think I would be damn certain that I did not get MPs' backs up. I would suggest that is complacency, to be quite honest.
  (Mr Bender) Can I comment. The one thing I can assure the Committee of is it is not complacency, it is something that I and senior management in the department take very seriously. Having built up the problem, for reasons I totally regret, solving it is not an overnight issue but I very much hope that it will be solved very soon. I repeat my apology, it is not complacency.

  214. The embarrassment that I have had over the last nine months. I have not got a big farming constituency but I have got a lot of farmers who write to me and I could not get responses from DEFRA for nine months. That causes me a huge amount of embarrassment and makes me look as though I am a prat, to be quite honest, when I am not but I am being let down by a Government department and that is totally unfair. I am delighted you are here today because I have been wanting to say that for nine months to be quite honest, so now we can drop it and move on.
  (Mr Bender) Can I just say I hope you will not have to say it again, Mr Steinberg.

  215. I will tell you what baffles me when I read the report, it is how Mr Bowden was paid for subsidies on crops that were destroyed by fire. Why was he paid a subsidy if there was no crop there in the first place?
  (Mr MacKinnon) It was an area aid that he was being paid or it was paid as an area aid to his contractor. It was a problem with the scheme at the time, recognised by the European Commission in the following year when they made it a condition that the crop was taken from the field and processed.

  216. So even though there is no crop there to be utilised, you still pay a subsidy even though it has gone.
  (Mr MacKinnon) We would draw the line at paying aid for no crop there because that would indicate that he had not followed agronomic practice in looking after the crop, sowing it, looking after it and harvesting it. There was a requirement to harvest but not a requirement to process.

  217. I tell you what baffles me even more that he claimed for crops—I think it is rather funny—that were destroyed in the fire in 1994, he claimed for crops that were destroyed in 1995, and I do not think we have got the 1996 one but I think they went on and on, did they not? Nobody cottoned on. If his barn burned down in 1994 you would have thought "Well, that is a bit of bad luck that". Then in 1995 there was a barn burned down and you would think to yourself he has gone against the norm really because lightening does not usually strike twice in the same place but in this bloke's case it has. Then the third time it happens, but still nobody cottons on. It is incredible. What were people doing?
  (Mr McNeill) I share your concerns. One would have hoped that staff might have identified, as other staff we have already identified have been vigilant in terms of the Objective 5b funding, etc.. One would have hoped that perhaps some member of staff might have thought this was rather unusual.

  218. I would have thought it would be the topic of conversation in the office. "Bowden's farm has burned down again". Quite humorous chitchat. "Oh, by the way, did you know that Bowden's farm burned down today". Incredible. What would happen now if those crops were burned down, would they still be paid?
  (Mr MacKinnon) The scheme has ended now. Looking at the period between 1997 and 2000 it would depend on whether it was a genuine fire. The only circumstance in which the processing requirement was foregone was where exceptional weather was experienced and the crop could not be processed as a result of that weather effect.

  219. Are you saying it would be paid or it would not be paid?
  (Mr MacKinnon) I think it would not be paid.


13   Ev 28, Appendix 1. Back


 
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