Third Standing Committee on
Monday 29 October 2001
[Mr. Mike Hancock in the Chair]
Draft Intervention Board for Agricultural Produce (Abolition) Regulations 2001
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): I beg to move,
That the Committee has considered the draft Intervention Board for Agricultural Produce (Abolition) Regulations 2001.
The Chairman: With this we may consider the draft National Assembly for Wales (Transfer of Functions) Order 2001.
Mr. Morley: I welcome you to the Chair, Mr. Hancock. I also welcome the hon. Member for Mid-Norfolk (Mr. Simpson), who will speak for the Opposition.
The purpose of the regulations is to abolish the Intervention Board for Agricultural Produce and to transfer its property, rights and liabilities. These will mainly go to the Secretary of State for Environment, Food and Rural Affairs, with others being divided among the Secretary of State, Scottish Ministers, the National Assembly for Wales and Northern Ireland's Department of Agriculture and Rural Development. As a consequence, the regulations repeal sections 6(1) and (2) of the European Communities Act 1972 and amend sections 6(3) to (5).
The regulations also provide powers to make consequential amendments to other primary and secondary legislation to ensure that we can continue to carry out the UK's obligations under the common agricultural policy that were previously entrusted to the Intervention Board. Other legislation and administrative action will ensure that these obligations are carried out by the Rural Payments Agency, which will succeed the Intervention Board. The regulations are part of a process that will set up the RPA and ensure that its customers experience no break in continuity of service.
The creation of the RPA is a significant part of the modernising government initiative. It brings together the administration of common agricultural policy grants and subsidy schemes, which were previously divided between Department for Environment, Food and Rural Affairs regional offices and the Intervention Board. It handles and accounts for £2 billion of CAP payments. The RPA is an executive agency of DEFRA. It will deliver customer services against a clear set of objectives and targets, and it will demonstrate clear lines of accountability and responsibility.
The former Minister of Agriculture, Fisheries and Food, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), announced on 24 July 2000 that he intended to make several changes to the MAFF regional structure, including the creation of a new paying agency. In this context, ``paying agency'' is a technical term for an organisation that pays and controls CAP expenditure in accordance with European Union rules. He also wrote on the same day to all Members of Parliament whose constituencies included MAFF regional service centres, as well as to others who had previously written to him on the subject, to let them know the sites selected for the new paying agency. More recently, Lord Whitty wrote in September to all stakeholders outlining the new regional structures in DEFRA. Since then, more detailed information has been provided in a question and answer leaflet, which was sent out on 8 October, and in a dedicated website launched on 16 October.
That date, 16 October, was also the first day in the CAP financial year, and was therefore the day on which the RPA started to operate as an accredited EU paying agency. From that date until this legislation comes into force, the agency has operated as a joint enterprise between the IBAP and DEFRA under a single management structure headed by its chief executive.
That is not the end of the story. The RPA has set out to modernise the way in which CAP payments are made by 2004. It will make a major investment in new technology so that farmers and traders can submit claims electronically, and to provide advanced electronic processing capability.
This is a direct response to concerns, which we have recognised, about the bureaucracy required to access CAP funds. During the creation of the RPA, we have taken account of industry views and we shall continue to do so in fine-tuning RPA procedures. With that in mind, the RPA has established an industry forum so that representatives of its key customer groups can meet regularly and contribute to its management and change programme. The forum, which met for the first time in July, is a high-level group supported by a growing network of specialist sub-groups that will focus on specific commodity or scheme issues.
The RPA, as part of a DEFRA-wide initiative, will also help to develop common databases. At present, the same information can be held in slightly different forms on a number of databases. That is confusing and disruptive and imposes needless burdens on farmers and traders. When the information is held on a unified database or databases, it will be easier to access, more accurate and cheaper to manage. This is a major programme of change. Risk management and the maintenance of business continuity are the keys to a successful restructuring process and transition to new systems. The RPA is taking a staged approach over three years to safeguard the Department's business interests and to ensure minimum disruption for customers and staff.
One of the ways in which the RPA intends to deliver better service to customers is to provide a single point of contact and a dedicated customer service centre. Staff are examining the options for the structure of the centre and the technology needed to support it. Farmers and traders will benefit from more efficient and rapid processing of payments with the achievement of 95 per cent. electronic service delivery capability by 2004. The RPA recognises that some customers may be unable or unwilling to use electronic services and will work to understand its customers' needs so that it can address those barriers systematically. There will also be significant benefits for taxpayers, with a 10 per cent. cut by 2004 in unit costs of administering payments, and further savings in subsequent years when the new agency has been fully established.
The RPA currently employs about 3,500 staff at 11 sites, with its headquarters in Reading. When the change programme has been completed, the number of RPA offices will have been reduced to five, at Reading, Carlisle, Exeter, Newcastle and Northallerton. The Department has a clear commitment to finding jobs for staff and minimising the risk of redundancies. Both present and past Ministers have kept in touch with local Members of Parliament individually.
I must emphasise that the other sites will not close. The creation of the RPA is only part of our programme of regional restructuring. Some sites that are no longer occupied by the RPA will be used by other DEFRA staff, particularly the new Rural Development Service. Some staff are also transferring to the Government offices, whose role in rural affairs has been enhanced following the recommendations of the performance and innovation unit. Both the Rural Development Service and the Government offices have played an important role in the post-foot and mouth disease recovery programme. The regulations abolishing the Intervention Board are a small but important part of a major restructuring of the way in which the Government deliver services for rural trading.
The National Assembly for Wales (Transfer of Functions) Order 2001 transfers some of the Intervention Board's functions to the Secretary of State for Wales. The purpose of the order is to transfer from the Secretary of State for Wales to the National Assembly for Wales all the non-statutory functions with which the Intervention Board for Agricultural Produce was charged in relation to Wales prior to the European Union's common agricultural policy. Paragraph 3 of the order provides for the exclusion from transfer of certain property that would otherwise transfer to the National Assembly for Wales under section 23(1) of the Government of Wales Act 1998. My Department has maintained close contact with the National Assembly for Wales throughout the process. As with other devolved Administrations, the Assembly is fully on board with the proposals for abolishing the Intervention Board and transferring its functions as they affect Wales. It welcomes the improved service that the reorganisation will bring to Welsh farmers and traders and to the United Kingdom as a whole.
I hope that the Committee will approve both the order and the regulations.
Mr. Keith Simpson (Mid-Norfolk): I, too, welcome you to the Chair, Mr. Hancock. This is the second occasion on which I have sat under your gimlet eye and I look forward to other occasions. I also thank the Minister for his kind comments.
I recognise a number of veterans on both sides of the Committee who have served long and hard, and usually silently, for their parties on other Committees.
Before we read the last rites of the Intervention Board for Agricultural Produce, bury it and give our blessing to its successor, I want to raise some points that, I hope, will not go on for more than an hour or two. We are debating this order against the background of the worst crisis in agriculture since the 1930s, and a recognition in the UK and Europe that the CAP needs drastic reform. We ought to bear it in mind that it is a question of confidence for the public, farmers and traders that MAFF and now DEFRA are able to cope with the challenges that they face.
There has been a series of challenges: BSE; swine fever, which affected my constituency; and, more recently, foot and mouth. I know that the Minister will not take amiss the fact that I draw the Committee's attention to today's press reports on the report by Devon county council, which, to say the least, is critical of the Government's handling of foot and mouth. This background is important for understanding that the movement from the Intervention Board to the Rural Payments Agency depends on the confidence that the public has in it, as taxpayers and consumers, and obviously on the confidence that farmers and other traders have that the RPA will deliver what is required.
It will be a challenge for Ministers to restore confidence among those involvedI nearly used the word ``stakeholders'', but refuse to do so. Nothing is taken on trust any more, so the challenge is difficult for those working in DEFRA and the newly constituted Rural Payments Agency staff. Government Members may take this amiss, but I do not think that the situation has been helped by certain comments that have been made since the summer about the farming community. We recognise that some in the farming community are creative in their accounting, are bad farmers or get things wrong and damage the environment. However, comments by some Ministers, Labour Members and Lord Haskins have given the impression to a beleaguered farming community that it is out of touch, oversubsidised, featherbedded and what the old British Army would have called a bunch of skrimshankers.
I welcome the opportunity to question the Minister about the crucial decision to abolish the Intervention Board and the transition to the Rural Payments Agency. The decision to merge MAFF's nine regional service centres and the Intervention Board was obviously taken because the service, which previously provided for the efficient and timely payments of the market support payments, was inadequate. The Minister rather glided over that. The evidence given to Select Committees and many hon. Members on both sides has suggested that that the payment system has not worked well in the past. One example of delays concerning dairy farmers was that which happened in autumn 2000 when farmers had to wait for £22 million of agrimonetary compensation to reach them, even though the Prime Minister had announced the money as early as March, during the Downing street farming summit. The delays were attributed to a series of glitches, such as the need to design and test new computer programmes, and printing problems.
I raise that because, quite rightly, the Minister emphasised the fact that a reason behind establishing the RPA was that new technology will allow it to deliver more quickly. At the end of last year, farmers were receiving their integrated administration and control system cheques sometimes two months late. An IACS cheque, as many hon. Members know, usually represents an arable farmer's biggest source of annual income. Cash flows are organised around it, and late payments result in high interest rates and an inability to pay monthly bills.
It is crucial for the farming community that the glitches of the past do not happen in the future. I do not think that I am exaggerating in saying that the farming community has gone through a very bad two or three years. I know that the Minister is concerned to ensure that farmers who are just about keeping their heads above water do not sink. If they do, it is not only our agriculture that is damaged. In many parts of the country there is no one else to look after the environment.
I welcome the opportunity to discuss such issues. On information technology and efficiency, is the Minister confident that the new system being established by the RPA can provide the required quality of delivery on payments to farmers and traders, and for us as taxpayers? He is aware that many farmers and traders are still not fully IT-literate, and/or prefer the personal touch. We know from the outbreaks of swine fever and foot and mouth disease that many farmers and other members of the food industry community have found it incredibly difficult to communicate with the old MAFF or the new DEFRA and their various agencies. What measures are the Minister's Department and the RPA taking to address that crucial problem?
Still on IT and efficiency, I have a further question about delivery. Through the work of the National Audit Office and our own Public Accounts Committee, we know the frankly appalling record of Whitehall Departments, going back decades, in establishing and managing IT systems that can deliver what has been promised. I mention three examples: the Ministry of Defence's track record in this area for delivering on major procurement systems; the serious problems that occurred in the former Department of Social Security; and the problems in the Passport Agency and the Home Officebeing raised on the Floor of the House as we speak.
Concern over the ability of the Intervention Board's replacement, the RPA, to deliver was flagged up by the Agriculture Committee report of 27 July 2000, headed ``Regional Service Centres''. It is an example of our colleagues in Select Committees flagging things up in advance to the Government, who do not always take notice of what they say.
It is only fair to say, at the beginning, that the Select Committee said:
``We support the principle of the agency and believe that it has the potential to offer a better, faster, more efficient service to farmers at a lower cost''.
However, it went on to say that
``our observations during our inquiry have left us with severe doubts as to the ability of MAFF to deliver this project. In the past, the management of the RSCs' CAP administration function has been criticised by the Committee of Public Accounts on the ground of major variations in efficiency, and more recently the PwC review identified a number of structural and operational issues, including the use of new technology, which led to inconsistent, inefficient and inadequate work processes.''
It further said:
``Public sector IT procurement projects have too often turned out to be disastrous. We are fully aware that failure in this instance would seriously disrupt payments on which farmers are often dependent and would incur financial penalties in the form of disallowance by the EU as well as other costs. It is therefore essential that, as part of proper management of the project and its implementation, the project team undertake thorough risk analysis, draw up a tightly-defined process and system specification and ensure comprehensive testing and trialling of the computer system. We cannot emphasise too strongly our belief that the transition to the new agency with is promised benefits for farmers and taxpayers will need a far higher degree of commitment to change and the ability to see that through than MAFF's past record has demonstrated.''
Have the Committee's suggestions been take up? I apologise for giving a long quotation, but I think that it is central to my questions about the ability of the new agency to carry out what we want.
The Minister said that another financial benefit claimed for the changes is a 10 per cent. cut by March 2004 in unit costs of administering payments, with further savings in subsequent years. A substantial proportion of those savings will come about through reductions in staff numbers. Under the old system, there were about 2,000 staff in the regional service centres and 1,350 in the Intervention Boardapproximately 3,350 people. In July 2000, MAFF estimated that by the time the new systems were fully operational, the total number of staff would fall to around 1,950a reduction of more than an third. Is there any evidence that those proposed staffing cuts will really lead to a more efficient system and deliver a better service? I recognise that this is a transitional period, but members of the Committee must understand that the farming community is sceptical.
My final question concerns accountability. Who will ultimately be held responsible for policy successes and failures? In the original MAFF statement of 24 July 2000, the then Secretary of State, the right hon. Member for Newcastle upon Tyne, East and Wallsend, said: ``The Agency''that is, the RPA
``will be constituted as an executive agency of the Ministry of Agriculture, Fisheries and Food and will therefore be answerable to me.''[Official Report, 24 July 2000; Vol. 354, c. 473W.]
I understand that the overall policy and financial framework within which the RPA operates is determined by the Secretary of State for Environment, Food and Rural Affairs and that in Scotland, Wales and Northern Ireland it operates on behalf of the devolved Administrations through agency agreements. The chief executive is responsible for the day-to-day management of the RPA, supported by a senior management team, and an ownership boardI apologise for using management newspeakprovides strategic direction and oversight. That is all well and good, but who is ultimately responsible and held to account for the RPA's success or failure? The unhappy track record of ultimate lack of accountability in both the private and public sectorswhich I acknowledge dates back to earlier Administrationsenrages our constituents and frustrates parliamentarians.
I have laid emphasis on these matters because it is important to get things right and it is our duty in Committee to put such questions to Ministers. I wish the Rural Payments Agency every success, not only from the point of view of the tens of thousands of farmers and others involved in the scheme but in terms of the administration of about £3 billion, which is a considerable sum. It is right and proper that we should make certain that the agency will be accountable to Parliament and that none of that money is wasted or misused by the farming community.
We are now burying the Intervention Board and seeing the birth of the RPA. I hope that the Minister will answer my questions in the constructive spirit in which I asked them.