However, it is a serious error for a Government Department to
make and creates a bad impression of the efficiency with which
this Report, an annual exercise after all, was prepared. This
must not happen again.
1. The Government
accepts that the failure to lay the Departmental Report properly
before the House was a serious error, but welcomes the Committee's
recognition that it was an "honest mistake". Action
has been taken within the Department to ensure that it does not
Above all else, MAFF must aim at accuracy in producing its annual
return to Parliament and we expect more effective checking procedures
to be put in place before future reports are sent for publication.
2. The Government
recognises the need for accuracy and is reviewing its checking
procedures to improve quality assurance before the Report is printed.
We recommend that the Business Plan also include a summary of
the hierarchy of objectives, PSA targets and output and performance
measures. This would be useful as an addition and would help MAFF
staff in particular by giving an overview of the Department.
3. The Government
accepts this recommendation.
The funding of the aid packages exercised us greatly when we examined
each of them at the time. It is vital, especially whilst individual
farmers are facing very difficult situations, that trumpeted announcements
are adequately financed and that the source of funding is clearly
marked. This is a key area for improvement in the future, and
the Committee will carefully monitor progress.
4. The Government
notes the Committee's comments but does not believe that recent
announcements on the funding of aid packages have been unclear:
the sources of funding have always been clearly marked.
We recommend that MAFF produce a timetable within three months
for a systematic audit of all regulations that are currently applied
to the agriculture and fishing industries, setting out dates for
the completion of each stage of the audit. We also urge that the
Red Tape Review Groups be invited to review progress on implementing
agreed outcomes and publish a progress report on a quarterly basis.
5. We have considered this recommendation
very carefully as the Government recognises the need for continued
vigilance over the content and effect of regulations on industry
to ensure that they are still needed, meet modern conditions and
technologies and do not impose disproportionate burdens on the
industry. For regulations which are already in place, the Red
Tape Reviews over the last year have focused on all those areas
of regulation which were identified by the industry as placing
unnecessary burdens on industry. The recommendations which were
accepted are now being implemented. Further reviews picking up
other recommendations, and announced in the Action Plan on 30
March, are making progress: the Better Regulation Task Force is
working on a review of the impact of environmental regulations,
and an independent review group chaired by Sir John Marsh, is
conducting a review of the dispensing of veterinary medicines.
We are currently considering the possibility of wider review of
agricultural input issues.
The Government fully recognises the importance of
continuing to monitor the effectiveness of regulations with all
stakeholders and, where appropriate, to seek changes to domestic
or European legislation to minimise the burdens on industry. However,
we believe that a review of the 480 plus statutory instruments
affecting agriculture and fisheries (not all of which impose burdens
on industry) will be very costly not only to the Government but
also to the industry who would need to be involved.
6. The Committee suggested inviting the
Review Groups to consider progress on their recommendations. Implementation
now forms part of the Strategy for Agriculture which in itself
is subject to regular monitoring and review. We also plan to offer
the IACS and Intervention Groups a meeting one year after their
reports were considered for a review of progress so far.
7. Further, we are working on creating
a culture with other member states and the European Commission
to minimise regulatory burdens. The conclusions of the Lisbon
Special Council should help achieve this objective since it was
recognised that further efforts are required to lower costs on
business and remove unnecessary red tape.
The benefits of a commerciallyoriented agriculture sector
are consistently underlined by the Government, with our full endorsement.
Whilst it is important constantly to review programmes to make
sure they represent value for money, we do not believe that reductions
in expenditure of almost 40% in two years in the programme aimed
at Food Industry and Competitiveness are in keeping with this
aim. If the money is not being spent effectively, then it should
not be spent at all; if it is effective, it is difficult to see
the rationale for a 40% cut, particularly in light of the new
PSA target to achieve an increase in the competitiveness and consumer
focus of the food chain.
8. The apparent
decline in expenditure under programme TM:120 is due to the run
down of payments under marketing schemes that are now closed to
new entrants. Since the Departmental Report was finalised, further
funds have been made available for new schemes, so expenditure
will therefore rise.
9. New expenditure that has been announced
(i) The Agriculture Development
Scheme (ADS). The Agriculture Development Scheme was launched
in October 1999. Awards totalling £2 million, to be spent
in 2000/01, were announced in February 2000. A second round of
the ADS was announced as part of the Action Plan for Agriculture
on 31 March. Awards totalling £3 million over the three years
2000/01- 2002/03 were announced in August 2000.
(ii) The England Rural Development Plan (ERDP).
Schemes under the ERDP will be introduced as soon as the European
Commission have approved the Plan. They include:
- a new
Processing and Marketing Grant, with expenditure of £44 million
over six years, commencing in 2001/02; and
- the new Rural Enterprise Scheme
(RES) which includes, as a priority, a measure for the marketing
of quality agricultural products. The budget for all measures
under the RES is £152 million over six years, commencing
in 2001/02. Expenditure on that element relating to the marketing
of quality agricultural products will depend on the balance of
good quality applications and regional priorities. However, £4.8
million has been set aside for national projects relating to the
marketing of quality agricultural products.
10. The closed schemes, where payments are declining,
(i) The Processing and
Marketing Grant (PMG). This was withdrawn by the last administration
in 1996, but claims from projects accepted under the scheme continued
(ii) The Marketing Development Scheme (MDS).
This was subsumed into Sector Challenge by the last administration
in 1996. The last claims should be paid in 2001/02.
(iii) Sector Challenge. This scheme was the responsibility
of the Department of Trade and Industry, but the Ministry is responsible
for administering payments to the agri-food industry. Only one
round of the scheme was held. The last claims should be paid in
Paragraph 21: There
is an urgent need to say how this (difficulty for IBEA in use
of productivity index to measure performance against targets)
will be addressed, either in the annual report or subsequent to
11. The Government accepts the Committee's conclusion.
The work of IB is regulatory, nondiscretionary and demand
led. It is largely operational, derived from EU requirements and
the activity levels for many of its schemes are dependent on market
conditions such as production and trade levels, world prices and
decisions taken by the EU. These operational parameters require
a flexible organisation whilst maintaining high standards of compliance
with EU obligations and control requirements in order to avoid
12. IB's productivity is sensitive to changes
in its workload that comprises peaks and troughs that are difficult
to predict. Where a scheme ends, a sharp reduction in outputs
ensues, whilst the manpower and overheads reduce far less rapidly.
This is due to the fact there are always residual tasks needed
to end a scheme and the few remaining claims are, of course, the
most difficult, time-consuming and costly to finalise. The converse
of this is that as new schemes emerge there are set up costs and
staff requirements needed well before any measurable outputs are
13. IB regularly reviews its key performance
indicators which includes productivity and efficiency and is developing
a new management information system to provide closer linkage
between corporate governance, risk management, business planning
and business efficiency.
14. IB's productivity improvement programme planned
through investment in new IT systems and processes under the "Modernising
Government" agenda, is convergent with the planned merger
between IB and MAFF's Regional Service Centres. MAFF/IB are committed
to delivering a 10% improvement in unit costs through the creation
of a combined paying agency and the introduction of new systems,
procedures and a new organisation.
It is important that schemes such as the OTMS are regularly reviewed
and if savings can be made, they should be made. However, as we
have seen before, when the cost to the industry overall is neutral
there are bound to be gainers and losers. In such cases careful
assessment of the cost and competitiveness implications must be
15. The Government accepts the Committee's conclusion.
The review of the OTMS abattoir arrangements produced savings
to the Exchequer of between £5 million and £6 million.
In deciding on the award of contracts, however, cost was not the
only factor. Care was taken to ensure that sufficient capacity
was provided in the areas where it was needed.
Ministry of Agriculture, Fisheries and Food
20 October 2000