Department for Environment, Food and Rural Affairs

Estimates, 2007-08 – in the House of Commons at 6:50 pm on 9 July 2007.

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[ Relevant documents: Third R eport from the Environment, Food and Rural Affairs Committee, Session 2006-07, HC 107, on the Rural Payments Agency and the implementation of the Single P ayment Scheme; and Fourth R eport from the Environment, Food and Rural Affairs Committee, Session 2006-07, HC 546, on the UK Government's " Vision for the Common Agricultural Policy" . ]

This Estimate is to be considered in so far as i t relates to the Rural Payments Age ncy, the implementation of the Single Payment S cheme and the UK Government's " Vision for the Common Agricul tural Policy" (Resolution of 2 July).

Motion made, and Question proposed,

That, for the year ending with 31st March 2008, for expenditure by the Department for Environment, Food and Rural Affairs—

(1) further resources, not exceeding £3,201,338,000, be authorised for use as set out in HC 438,

(2) a further sum, not exceeding £2,731,293,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.— [Mr. David.]

Photo of Michael Jack Michael Jack Conservative, Fylde 7:17, 9 July 2007

May I say how delighted I am that at last, following on from December 2002, the House has an opportunity to debate matters connected with agriculture? I want to say at the outset how pleased I was that the Liaison Committee saw fit to recommend two of the reports by the Environment, Food and Rural Affairs Committee—the report on the Government's document "A Vision for the Common Agricultural Policy" and the report on the Rural Payments Agency and the problems that it faced—as subjects for this part of the estimates day debate.

In the light of the publication in December 2005 of a seminal document looking to the future of the common agricultural policy, my only regret is that the Government have not seen fit to hold any kind of debate on a document that was billed as singularly important, particularly during the remaining weeks of the British presidency, which is when it was produced. Given the fact that some 40 per cent. of European Union expenditure is still on agriculture—it is a major part of the EU budget—it was something of a surprise to me and to the Committee that the Government did not choose to debate that report. If nothing else, it would have given the House, and those who represent agricultural constituencies, an opportunity to make a contribution to the development of the ideas for reform of the CAP. I shall try to highlight some of the points that the Committee drew out as it looked into that subject.

I am delighted to see on the Front Bench the Under-Secretary of State for Environment, Food and Rural Affairs, Jonathan Shaw, and I welcome him to his challenging role. Before the debate started, I noticed that he was thumbing through the "vision" document. It might have been the first time that he touched it, and if it was I hope that he enjoyed his brief read of it and that he will go back to it after the debate. It will be very important indeed, particularly as we move towards 2008, when the European Union will take stock and give the common agricultural policy a health check. In particular, the EU will consider the major reforms that were introduced by the previous Commissioner in 2002, and thinking will begin to turn towards the reform programme that is scheduled to be introduced in 2013, when, effectively, the current CAP will come to an end. It all sounds a long time away, but as we all know, given the way in which the wheels of Europe turn, we will arrive at that point rather quickly. If we have not done our homework, we will not be prepared to lead and take part in the debate about shaping not only the future of Europe's agriculture but its rural policy. Our report touches on that point.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Does the right hon. Gentleman accept that, even in a purely urban constituency such as mine, constituents must pay for the CAP through their taxes and through high food prices? The issue affects my constituents, as well as his.

Photo of Michael Jack Michael Jack Conservative, Fylde

In his normal perceptive way, the hon. Gentleman picks up on a number of themes of the report that I shall discuss in a moment. The question whether Europe's current expenditure on agriculture and, to a degree, its rural policy is value for money is a central issue for discussion. As agricultural policy moves from being a question of subsidising production to a question of paying for environmental goods and the development of a rural policy for new and existing member states, challenging new subjects of debate arise.

One point that the report touches on is on what exactly the money should be spent. For example, in the context of environmental goods, what exactly do the public want purchased in their name? In our report on the CAP and in previous reports, the Environment, Food and Rural Affairs Committee touched on that very point and asked the Government to try to evaluate and have a debate on the matter, to make certain that the use of public moneys is properly targeted. That goes back to the point raised by Kelvin Hopkins: the public who are effectively paying for such schemes through their taxes must feel that they are getting some value for money. Without doubt, the public enjoy the countryside and good quality food, but at the moment they do not have much of a say about the use to which public funds are put.

Photo of David Taylor David Taylor Labour, North West Leicestershire

I thank my right hon. Friend—as I will call him—the Chair of our Select Committee for giving way. May I develop the point made by my hon. Friend Kelvin Hopkins? Is it not the case that the environmental goods to which my right hon. Friend refers are extensively used and appreciated by people in rural areas? There is a great deal of evidence that people in urban and metropolitan areas do not make sufficient use of the goods for which their taxes pay. Those in rural areas and landowners can provide access to the countryside; they need to reach out and promote access to the settings which so many people who live in rural areas enjoy.

Photo of Michael Jack Michael Jack Conservative, Fylde

I concur entirely with everything that my hon. Friend has said. I will call him my hon. Friend, because we are friends on the Committee and we work closely together. In his normal perceptive way, he has put his finger on an important point. Next year, it is food and farming year, which in a way will try to bring town and country closer together. Some of the issues that he has referred to will then be the subject of more intense dialogue as farming reaches out to the urban population.

In preparation for this debate, I made a list—I do not claim for a moment that it is the definitive list—of some of the challenges that UK agriculture faces. I did so because the other challenge of this debate is how to bring together two reports that deal with items that are different but none the less related. I listed the following points. Our, and indeed Europe's, agricultural industry faces challenges in relation to food security in a world where the distance that food travels is an issue, and where the transmission of disease can threaten the supply chain. We must also consider biodiversity, environmental responsibilities, animal welfare, biofuels, genetically modified crops, global competitiveness, powerful supermarkets, the survival of the rural economy, the reform of the common agricultural policy, which we are discussing, and the restructuring of rural policy. That is just my list and I am sure that other right hon. and hon. Members who are taking part in the debate will have their own list.

The only problem with my list is that the "vision" document effectively sidestepped many of those issues. It went down the road of developing and extending existing thinking and there was very little that was novel in it. Where there was novelty—and this is a further item to add to my list—was on the question of how farmers should be paid. We have moved to an era of the single farm payment, but previously there were some 38 different commodity regimes, each with their own individual payment scheme and different rules for farmers. The simplified method of the single farm payment scheme introduced a one-off system under which farmers were paid. Initially, that related to historic payments. Subsequently, we moved to payments relating to the area that they farm. That method brought into being a process whereby farmers had some of their subventions top-sliced to help to pay for a system of modulation for the development of rural policy.

Our report on the single farm payment and what went wrong raises not only a series of practical observations on the execution of Government policy but some fundamental points of principle. Before I go into detail on that point, I would like to put on the record my appreciation of the work of the staff of the Select Committee. It is all right for the Chair to stand up and make a speech in a debate, but we could not do so if we did not have reports to discuss, information to dissect and analyse, and results put to us. We could not do so if we did not have talented people as our Clerks. Matthew Hamlyn began the investigation into the single farm payment for us and his successor Chris Stanton came into post at the end of the inquiry; he had to assimilate all the facts, and helped to draft the report. I should also mention our former second Clerk Jenny McCullough. Those three people played a crucial role, as did Jonathan Little, our agricultural specialist, who has moved on to new work with Natural England. Without those people, we would not have produced the two reports. I put on record my sincere appreciation of all that they did to bring them about.

The report on the Rural Payments Agency can be summarised as a classic piece of Select Committee work. We were dogged in our determination to get to the bottom of what went wrong. We took our time, but we finally got our man—as the Mounties say—when we got hold of the former chief executive of the RPA, Johnston McNeill. In our discussions with him, we were able to get to the heart of what went wrong. However, we had already made our own initial foray into the subject; in its previous work, the Committee warned the Government that change to the way in which the RPA operated would be fraught if the agency did not have the right IT and computer systems expertise. Despite those warnings, given in 2003, there has been a debacle concerning a core responsibility of the Department for Environment, Food and Rural Affairs. That is why our report goes beyond the mechanics of what went wrong and explores fundamental issues to do with accountability in government.

One of the core responsibilities of DEFRA is to ensure that farmers are paid a just price, and on time. That is about not just ensuring the survival of farming businesses, but making certain that the rural economy's cash flow is not disrupted, and that a central function of DEFRA is carried out effectively and efficiently. In the case of the Rural Payments Agency and the delivery of the single farm payment, that was not the case.

The problem began in 2001, with the RPA change programme, and it came home to roost when the European Union agreed decoupling for the single farm payment on 26 June 2003. A year later, on 17 June 2004, Mr. Andy Lebrecht, a senior civil servant in DEFRA, told the Department's management board that payments under the new arrangements would be made by 1 December 2005. The die was cast, the expectations in farming were there and preparations had begun. By 19 January 2005, however, the Rural Payments Agency announced a delay.

The ministerial response from Margaret Beckett, the former Secretary of State, was to appear at the National Farmers Union conference and say that she was "bloody livid" about the situation. Although that was perhaps not the response that should have come from the Secretary of State, she should have been fully engaged in the decision-making processes that led to the problems that the RPA faced. She was the Secretary of State when the policies were designed and when the implications were considered, and she ultimately carried the responsibility for what happened in her Department —[ Interruption. ] Perhaps she is listening to the debate, and we may have an unusual intervention by telephone—perhaps not.

The way in which DEFRA went about introducing the programme was too much change, too soon. That is clear from what the Department has said in its as-yet-to-be-published report and from the information that the Department gave the Committee, which is why we singled out certain named individuals who gave evidence to us. We believed that they bore a responsibility for what had occurred, and I do not resile for one moment from the fact that the Committee's report put down some strong words about who was responsible. One should bear in mind the billions of pounds that were not delivered to England's farmers and the rural economy, as well as the losses to the farming industry—calculated at £20 million—which will have an incalculable effect on the cash flow of the rural economy.

There are also the cost overruns to the Department. To look at the facts, the NAO said that DEFRA would realise only £7.5 million of the £164 million-worth of savings from the introduction of the single farm payment scheme. When it looked at the RPA operating business plan in late 2006, the NAO said that the RPA's running costs would be £197.1 million, with an additional £46 million on top of that, which consisted of a further £27 million in extra running costs and £19 million for new software developments, against an original budget of £190 million.

If that degree of financial mismanagement had occurred in a public limited company, the board would have been out, never mind the chief executive. That is why our report had some strong things to say about named officials, as it was quite clear not only from our analysis but from the work done by the National Audit Office, which has now been vindicated by the Public Accounts Committee, that we had to probe who was responsible for DEFRA's failure to carry out one of its central activities. Those failures to deliver have led DEFRA to face for the first tranche of failed payments a disallowance from the European Union of £131 million. In addition, there is a contingent liability on DEFRA's books of £305 million. Not all of it is directly related to the RPA, but that is an indictment of failure, and that is why our report was couched in strong terms.

Photo of Mark Todd Mark Todd Labour, South Derbyshire

One of the largest failures—probably the fundamental failure in this project—was that of risk analysis and risk management. Would it surprise the right hon. Gentleman that the former permanent secretary, who is one of the named officials in the report, chairs the body looking at risk management on behalf of the Treasury for the civil service?

Photo of Michael Jack Michael Jack Conservative, Fylde

That person will certainly understand about risk, but I am not so certain about management. The hon. Gentleman's point worries me very considerably indeed. At the heart of this matter are the mechanisms that the Government put in place when they introduce complex IT projects. Indeed, when the hon. Gentleman was a member of the Select Committee he highlighted that very point about the need to look at issues in detail and have the right expertise to guide us forward. What was clear, however, was the flawed relationship between DEFRA and its IT provider, Accenture, which was taken on to make changes in the Rural Payments Agency. Then, however, there had to be a second and subsequent discussion about how the single payment scheme would be introduced. DEFRA decided that it would remove some of its staff in pursuit of its Gershon savings, only to find that it then had to recruit another 900 temporary people in the Rural Payments Agency to make the scheme work. The very people who had experience of dealing with farmers were removed as part of the change programme, only to be replaced by less than expert people. The Department had a rural information system—a computerised system that was supposed to cope with the mapping and to provide those running the single payment scheme with information—but it singularly failed. I could go on through the litany of failure.

On the question of risks, it beggars belief that the Office of Government Commerce did not put the brakes on what was happening. Yes, it produced some reports and red traffic lights, but despite the mounting risks of failure that were pointed out to DEFRA, which had a finger in the pie and an interest in the running of the Rural Payments Agency, and despite a great deal of investigation—I do not know whether the Department was blinded by events or by ministerial assurance that it would all be all right on the night—the wheel fell off big time. When, at the beginning of 2006, Ministers were promising payments first in February and then in March, the Committee produced an interim report warning of what was happening and talking about the need for interim payments, but we were rubbished by Lord Bach. I remember him talking on the "Today" programme about the Select Committee being chaired by a "very strong person, that Michael Jack—he's a Conservative." I resented the fact that he tried to politicise my work as the Chair to highlight the failures and danger points and what was going to happen with the Rural Payments Agency. In fairness to Lord Bach, he retracted some of those remarks when he gave evidence before us. When the wheel fell off, however, DEFRA had not heeded the warnings, and we now know what happened to the rural economy.

As for who was responsible and who should have accepted responsibility, the head that rolled was Mr. Johnston McNeill's—it was the agency's former chief executive who was fired. Sir Brian Bender, the former permanent secretary at the Department, whose name was on the documents about the Rural Payments Agency, the DEFRA change programme and the agreement on the path forward, and Mr. Andy Lebrecht, one of the most senior civil servants in the Department—he sat on the management boards of the Rural Payments Agency and, indeed, on DEFRA's own boards and should have been the link—were the people who effectively signed off what happened. Rachel Lomax, who was supposed to be an expert, was brought into the Department to provide advice. Despite all that, there was still failure, but only one person has paid for it with their job. The then Secretary of State went on to become the Foreign Secretary

Photo of Michael Jack Michael Jack Conservative, Fylde

She got promotion, while the farming industry lost £20 million and DEFRA's costs overran, with all the problems that have resulted for British Waterways and the Environment Agency.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

The Government's response to the Select Committee's report on the Rural Payments Agency has not yet been reported to the House, so we cannot refer to it in detail. Were the Government in that response to seek to hide behind the argument that Select Committees ought not to act as disciplinary tribunals on matters relating to officials, or if the Government were to hide behind the ministerial code when Select Committees criticise the behaviour of Secretaries of State, does the right hon. Gentleman agree that that would be a grossly inadequate response to the very serious issues, both particular and general, that the Committee raised about accountability in this case, and more generally, with reference to the responsibilities of permanent secretaries and Secretaries of State?

Photo of Michael Jack Michael Jack Conservative, Fylde

Again, I agree with the hon. Gentleman's analysis. That is why the importance of the report goes well beyond its examination of the mechanics of what went wrong in the Rural Payments Agency. There is a wider question that the House should debate: when a Department fails to deliver on a core activity, who should pay the price? I go back to what I said before about a public limited company. If a plc had failed its shareholders in the way that the Rural Payments Agency has failed the farming community, not just the chairman and the chief executive but the board would be out. Why? Because they would know in simple terms that they had not done what they were employed to do.

I do not want to go beyond the boundaries of the debate, save to observe that if we look at many areas of Government—the Home Office and the Department of Health, to name but two—failed IT projects litter what those Departments have not done. Where did the responsibility lie? Now that we have a different Prime Minister, perhaps he will look at that point.

When we examine the RPA's latest published business plan, the failure is summed up succinctly in a sentence or two. It states:

"The ambitions to implement a major change programme and simultaneously deliver a flagship new scheme (the Single Payment Scheme) proved not to be achievable in the timeframe foreseen".

It goes on to say that the document covers the early stages of recovery for the RPA and outlines its strategy and business plan for 2007-08

"to meet the challenges we face to become an effective Paying Agency that meets its targets, responds to change and efficiently serves the needs of its customers."

The process could go on until 2012, and as the Government's reply to our report already indicates, it will cost another £55 million.

Photo of Mark Todd Mark Todd Labour, South Derbyshire

I thank the right hon. Gentleman for giving way again. Does he share my view on the subsequent episode? I was greatly reassured when Lord Rooker was appointed to continue the work of recovering the disasters of the programme, and he deserves to be complimented on much of the pragmatic activity that he as a Minister has led in that task.

Photo of Michael Jack Michael Jack Conservative, Fylde

I agree with the hon. Gentleman. I recall, however, that Lord Rooker was careful not to go too far. At a meeting I attended, he came along and said, "I've come here to make sure you know absolutely nothing about what's going to happen in the future until I'm clear what the detail is." So I learned from that that we had a new form of pragmatism in the Department.

Photo of David Taylor David Taylor Labour, North West Leicestershire

Does the House agree that it is a great pity that Hansard will not be able to reflect fully the right hon. Gentleman's mastery of regional accents in this land, with which he regales us from time to time in Committee?

Photo of Michael Jack Michael Jack Conservative, Fylde

I am most grateful for the hon. Gentleman's comments.

I am sure we will continue to get candour, which is what is required. I observe in objective 5 of the business plan for 2007-08, on training, that the Rural Payments Agency hopes the outcome will be that

"Staff are clear about the Agency's objectives, their role in achieving them and motivated for success".

Some of those staff worked very hard indeed, but they were badly let down by the management.

Photo of Anthony Steen Anthony Steen Conservative, Totnes

My right hon. Friend may be aware that part of my constituency is Dartmoor national park. The hill farmers there have faced very difficult times. Will he comment on the problems that will arise if the single payment scheme continues not to differentiate hill farmers and lowland farmers? As I understand it, if that were the case, the hill farmers would give up hill farming, and the ramblers would have to wrestle through 6 ft of grass to get through to the Dartmoor national park, which was set up in the 1940s after the war to give recreation and leisure to urban dwellers. They will have to be extremely fit, they will need scythes and they will need military dress to get through the powerful obstacles that will prevent them from enjoying the pleasure and solitude of the Dartmoor national park.

Photo of Michael Jack Michael Jack Conservative, Fylde

I am grateful for my hon. Friend's observations, but one of the problems that the single payment scheme had to cope with was exactly the differentiation that he mentioned between the upland areas and the lowland areas. It did so, and in differentiating as my hon. Friend suggests, it created further complexity in relation to the already complex use in England of the so-called dynamic hybrid model. I contrast the problems that we had in England in dealing with 121,000 farmers with the situation in Germany, where there were three times as many farmers, four different computer systems and 19 Länder as the paying agents, and the task was completed on time.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

It is fair to say that originally there were two areas, but there was a request from the industry to add a third area—moorlands.

Photo of Michael Jack Michael Jack Conservative, Fylde

Indeed, and there was also a request from the farming industry that horticultural land, for example, should be included. Part of the problem with the volume of work that overwhelmed the agency was the lack of appreciation by Ministers of what all that extra complexity, new land and everything else that they were introducing into payment for the first time would mean in reality. I will not labour the point further.

I draw my remarks to a conclusion on the single farm payment. We have raised the important issues of accountability, bad planning by the Department, and failure to heed warnings by a Select Committee, particularly in relation to IT. It may well take until 2012 to fix the RPA and another £55 million will have to be spent.

Photo of Anthony Steen Anthony Steen Conservative, Totnes

I am grateful to my right hon. Friend for giving way again. Will he accept from me that there is another warning that needs to be sent to those responsible for single farm payments? Unless they get the upland payments right, national parks will be places that people cannot enter.

Photo of Michael Jack Michael Jack Conservative, Fylde

My hon. Friend tempts me into a debate on hill farming and upland activity, which I will resist. I hope that in his enthusiasm, the new Minister will be able to persuade the powers that be that the House should still, even now, have a proper chance to debate agricultural issues in a way that would allow my hon. Friend's point about hill farming to be discussed. There may yet be a chance when we turn to the second of our reports, which considered common agricultural policy reform.

In summary, the Government missed the opportunity to put forward some genuinely visionary opportunities for the CAP against the background of the health check in 2008 and the fundamental reforms that will take place in 2013. The change of French President from Chirac to Sarkozy offers a new dynamic, but there is a problem—in countries such as Germany and France which traditionally drive the CAP debate, there is a difference between the agriculture ministries and the finance ministries. The agriculture ministries are traditional. They are not minded to change. They stick to 2013 as the date, and the only date, when the CAP could reform itself. They wish to postpone the removal of the dairy regime and the abolition of set-aside land. However, if one goes to the finance ministries, as we did in Germany and France, one will find that our new Prime Minister is their pin-up because he is advocating an abolition of pillar one and a reduction in expenditure, as they see it, in terms of the vision document. In his role as Chancellor of the Exchequer, he was their No. 1 trailblazer for reform. However, in France and Germany the finance ministries play second fiddle to the agriculture ministries.

That is important, because when the Government introduced their vision document at the close of 2005 as a contribution to the debate on the budget of the European Union, and in an attempt to reduce the CAP budget, they failed to introduce it to other member states. In fact, judging by what we heard when we went to subsequent agricultural meetings of fellow European parliamentarians dealing with these matters, it did damage. If the Government want to resurrect their chances of influencing the direction of the CAP in future, they will have to spend a lot more time going out and explaining the UK position to our fellow Europeans, against a background of the feeling among the new member states that unless they are offered the same deal as the old member states they will not parley on any kind of change that will lead to a reduction in overall expenditure on the agricultural budget and a redistribution of moneys to the rural economy.

That is why our report calls for the development of a rural policy for Europe. As we have heard, the public are concerned about what this money is being used for. Farming has some major responsibilities in terms of the environment and biodiversity, and of change—of turning the rural economy into a place where farming is not the only activity. As the vision document correctly identifies, only about 1 per cent. of employment directly involves farming. Much else can be done in rural England, as in rural Europe, to develop new forms of economic activity, but the document is light on all those aspects.

We have recently been considering the new European Union treaty. The terminology of article 33, which deals with agriculture, is interesting. It says that the objectives of the CAP are

"to increase agricultural productivity...to ensure a fair standard of living for the agricultural community...to stabilise markets...to assure the availability of supplies...to ensure that supplies reach consumers at reasonable prices."

There is nothing about the environmental and biodiversity dimensions which now typify European concerns about animal welfare, disease or the competitive world in which agriculture operates. The discussion of the treaty has been a lost opportunity to redefine the scope and purpose of what agriculture is about. With our far more reform-minded view, that is something that we could yet still deal with. Our report lays out the challenges that remain in relation to Europe's discussion of the future of its rural economy. There is a need to conduct a hearts and minds operation in relation to Europe. Reform is in the air as regards agriculture, and the competitive pressures are there. Questions of food security must be dealt with—there are no two ways about it.

The rural economy is something special, from the physical point of view and from the biodiversity point of view. It represents the lungs—the point of relaxation—for so many of the people whom we represent in urban Britain. The winds of change are blowing. Mrs. Fischer Boel has some interesting ideas on reforming the vegetable regime, and she has established common market organisations for all such regimes. There is discussion about removing the whole question of a dairy regime, which would set Britain's efficient dairy farmers free. The reform opportunities are there to make Europe's agriculture far more competitive and environmentally aware and to develop a vibrant rural economy. However, if the Government want to lead that debate, they will have to do far better than the vision document. That was a poor first step, but it may be the precursor to a bigger debate.

Photo of David Taylor David Taylor Labour, North West Leicestershire 7:54, 9 July 2007

I rise with some relief, having been contacted three or four hours ago by the Clerks of the Committee to be told that the Chairman of the Committee was stuck on the tarmac at the airport in Florence and might not be able to make the start of the debate. Had I delivered on my offer to open the debate if he could not, the House would not have been regaled with the forensic performance that we always appreciate from Mr. Jack, or his entertaining tour d'horizon of some of the main participants in the Rural Payments Agency saga, in particular.

Together with my hon. Friend—as I shall call him—Mr. Williams, I was involved relatively early in the process, in late 2005, when we both visited the Reading office of the RPA in our roles as rapporteurs, when we did some of the early fact-finding work on what appeared to be going wrong with the single farm payment system. I am happy to make one or two salient observations from my own experience, having spent, before coming into this place in May 1997, three decades in medium to large-scale public sector information and communications technology projects. I have always taken a keen interest in the problems that Governments—successive Governments, to be fair—have had in delivering on large-scale systems of that kind.

At the start of his comments on the RPA, the Chairman of the Committee said that our report was shot through with concern and alarm that accountability had not been at work in the events that followed the problems with the single payment system. He said that only one person had been sacked for his role in this affair—Johnston McNeill, the chief executive of the RPA. However, given that the former Minister in the House of Lords was removed shortly after the saga started to bubble up, it could reasonably be inferred that there was a firm link between his sacking and the RPA system. It is odd that so few people paid the ultimate penalty. For example, the senior civil servant—the permanent secretary—escaped any blame, condemnation or criticism. Not only that, but while many people were being taken off on their career tumbrils to some far-off car park and summarily disposed of, he was slipping out of a side door and being promoted elsewhere in the Government bureaucracy. New terms could be created as a result of this process. When, in sport, people play a virtuoso sparkling role in any particular game, they are said to have "played a blinder". The civil service equivalent is to bound up the career ladder from disaster to disaster, hereinafter to be known as "playing a Bender". It is sad that that phrase could get into the English language in that way.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

The hon. Gentleman might like to bring out the point that in his Committee's report the then permanent secretary praises Mr. McNeill as being by far the best of the applicants for the job, and refers to his leadership of the Meat Hygiene Service. If he deemed that a success, that, if nothing else, brings his judgment into serious question.

Photo of David Taylor David Taylor Labour, North West Leicestershire

In my sad experience, people in the upper echelons of the civil service, and to an extent in local government, and politicians who are elected to those various organisations, tend to have a less than complete appreciation of the potential and detail of the world of ICT. In such an environment, in the land of the blind the one-eyed man is king. The "king" who is often chosen to be a consultant or to be directly responsible for a complex large-scale project can disappoint in many ways, because people do not know what they are looking for. They grasp at straws. They are susceptible to the blandishments of the snake-oil salesmen who populate the large-scale software package market. That is a pity. The hon. Gentleman's own Government were equally guilty of that before 1997, and during the past 10 years we have shown that we are not immune to the same problems.

Photo of David Drew David Drew Labour, Stroud

I know that we cannot refer in any detail to the Government's response to the Committee's report, which has taken a long time to come. Given my hon. Friend's criticism, there does not seem to be much evidence that the Government's response has taken any notice, in any detail, of the criticisms that we advanced. What are his comments on that?

Photo of David Taylor David Taylor Labour, North West Leicestershire

My hon. Friend is right. We cannot refer to the response in any detail, but I shall come to a criticism of the Government's probable response in a moment. The Department for Environment, Food and Rural Affairs continues to reiterate that the responsibility for delivering the scheme and advising Ministers on the ability to meet the timetable rested solely with the chief executive. To me, that sounds like a post hoc rationalisation, and as such, it is absolutely unacceptable.

One of our main concerns was that no lessons had been learnt—here I come to the point raised by my hon. Friend Mr. Drew. I think that we shall find out that in the Government's response, they will say something like, "Many of the lessons learnt have been fed into the Department's wider review of its governance of delivery." There is precious little evidence that that is true, and I am dubious about it. Perhaps I am an old pessimist, but I can foresee, in similar circumstances, a repeat of the problems that we saw with the RPA and other major systems, and I think that this Department, and other Departments, will not learn from the lessons that can be learned.

We had two serious concerns, which lay at the heart of the RPA saga. The Chairman of the Committee referred to one a moment or two ago.

Photo of James Gray James Gray Conservative, North Wiltshire

Before the hon. Gentleman leaves the question of accountability, which I think he is about to, I ask him to suppose that the Government's response to our extensive, trenchant and highly public criticisms of Ministers in the report were to be something along the lines of, "The accountability and responsibility of Ministers are set out clearly in the ministerial code. The Government does not believe that there is any need for further guidance." If the response were as short as that, would he agree that that was a disgraceful failure to address the trenchant, important criticisms made by a Select Committee, and would bring the Government into some disrepute?

Photo of David Taylor David Taylor Labour, North West Leicestershire

I would be surprised if the Government's response were along the lines the hon. Gentleman suggests. If it were, I am sure that when we discussed the response in the days to come, we would want to go back to the Department, and perhaps the Minister who is here today, for clarification, because it would seem to stand at odds with some of the new principles espoused by the new Prime Minister a few days ago. I hope that our Committee would do just that.

Any response along the lines of, "Many of the lessons learned have been fed into the Department's wider review of this Government's delivery," would be surprising. If the Government then went on to say that their arrangements should be fit for purpose, we would all give a weary sigh at such a cliché. The phrase "fit for purpose" is a substitute for analysis and thought, and a poor one at that. Let us hope that the response does not say that.

I was moving on to refer to the first of two of our core concerns at the heart of this saga. DEFRA Ministers selected the dynamic hybrid model in the knowledge that it was inherently more complex and risky, and one of our recommendations dealt with that. A related concern was that the amendment of the original dynamic hybrid model so soon after it was announced, by adding a third region, reinforced our conclusion that the wider implications of the dynamic hybrid model had not been thought through. I expected the Government to respond in some detail to either or both of those key concerns. In fact, however, they have not. Answer is there none. There is no observation, no comment, no response, no rationale, no apology, no justification, or even objection, to the points made. I found that rather disappointing.

In the general sense, the Government say that policy development of the dynamic hybrid was "inclusive and fluid". I think that that is a new phrase that will enter the parliamentary lexicon: "inclusive", meaning that all God's children are consulted, and "fluid", meaning that none of them are listened to. What emerges—the fluidity—is a shapeless form that cannot be recognised or measured, and does not perform.

In relation to our final concern, we asserted to various witnesses that it should have been obvious at the start that the dynamic hybrid model was impossible to deliver in the time scales flagged up by Mr. Andy Lebrecht. The date escapes me, but I think that the Chairman referred to it a moment or two ago. The RPA's record until 2006 raised questions about its ability to deliver. According to what rumours suggest about the Government's reaction to our report, they will say that it is clear with hindsight that the RPA's ability to deliver was overstretched.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

On a point of order, Mr. Deputy Speaker. I think that I am in a small minority, in that I cannot refer even obscurely to the Government's response to this report. It is quite obvious that most hon. Members have it. I know that it is for the Committee to publish it, but it seems to me that the hon. Gentleman is obscuring only slightly the source of everything that he is saying. I suggest to you that it is putting a number of us at a great disadvantage.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

I am afraid that it is not for the Chair to decide on these matters. I understand that a report has not yet been produced for the House, but as always in this kind of debate, it is important that any documents necessary for the debate ought to be before the House.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

Further to that point of order, Mr. Deputy Speaker. Am I not right in saying that a Government response belongs to the Committee, and that until the Committee publishes it, it cannot be made available to hon. Members who are not in that Committee? In such circumstances, is it right for a member of the Committee to refer to it in debate when it cannot be accessible for those of us who also wish to participate?

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

The hon. Gentleman has stated the position as far as the Committee and its report are concerned precisely and absolutely correctly, and it really is for David Taylor, who is addressing the House, to decide how much he should use what is available to him.

Photo of David Taylor David Taylor Labour, North West Leicestershire

I am grateful to you, Mr. Deputy Speaker, and in reaction to that point, I shall move on.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

Does my hon. Friend agree that it is most unfortunate that the Government's response to this important report and the criticism within it was not made available to the Committee in good time? The Committee was not, therefore, able to report it to the House so that it could inform the debate.

Photo of David Taylor David Taylor Labour, North West Leicestershire

That is indeed unfortunate. I have just looked at the date on the report: 21 March 2007. A quick calculation suggests that that is some 16 or 17 weeks ago, and I would have thought that an adequate time in which to respond. However, in deference to the point made by Mr. Paice, which is fair, I shall move on.

My final, core concern in the report relates to our observations about Accenture, the IT supplier of choice, and those observations are in the public domain. In the published report, which is available to the House, we said:

"Accenture witnesses appeared to have been well schooled in not venturing comment on matters which they deemed were beyond their contractual observations."

That is a masterpiece of understatement, although accurate in its own right. It could be said that Accenture designed the brakes and steering system for the SPS bus that careered over the ravine, but has been exculpated merely by saying that it designed the bus to be unresponsive to the brakes and the steering wheel because that is what the customer wanted. It therefore asks how it could be held responsible for the design, given that it was delivering to the specification.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

I am sure that my hon. Friend recalls that Accenture's contract was worth something in the region of £54 million, and that when it gave evidence to the Committee, despite having been paid such a large sum and apparently being at the heart of the project, it tried to absolve itself of responsibility for the system's lack of delivery. I will not refer to the response that the House has not yet received—but does he agree that the attempt by Accenture to abdicate from responsibility requires a full response from the Government?

Photo of David Taylor David Taylor Labour, North West Leicestershire

I agree. Accenture's role in the matter has been underestimated, and it should be held responsible in a more substantial way than it has been so far.

In our report, we examined the Hunter review, which began with a study by Corven Consulting at a cost of more than £500,000. Paragraph 143 criticised that. The example is emblematic of the use of consultants. The contract was almost open-ended, the objectives were unclear and the potential for making substantial profits for delivering little was there throughout the process of using Corven Consulting. We need to get a grip on that in phase 2 of the Labour Government as they enter their next 10 or 12 years in office.

The Hunter review stated that no structural changes should be made to the RPA that would jeopardise the target of achieving a stable SPS by the 2008 scheme year. It urged the RPA to focus on that target. I hope that that will happen. The process was to take seven years, with only 10 per cent. linked to the flat rate in the first year. It was always possible for that first year—2005—to have a 0 per cent. flat rate and to move to a 100 per cent. flat rate over a five-year period, thus leading to full implementation of the system by 2010 rather than 2012. If that had happened, disaster would not have been visited on the rural community.

The Hunter review said that in the slightly longer term, beyond 2008, the RPA should commit itself to making the SPS application process by e-channel— effectively online—and that it would not be credible to make a commitment until the SPS was stable. We must expect delay until we have stability.

Let us be a bit more positive. The RPA is in recovery mode. The National Farmers Union has supplied detailed and regular briefings on the topic, which are balanced, fair and helpful. It says that there is a long way to go but that performance in 2006 has been much better than in 2005. A flood of money was distributed in February and March this year, and the target of making 96 per cent. of payments by the end of June was met.

Photo of Michael Jack Michael Jack Conservative, Fylde

However, there are still 20,000 farmers with 2005 payments who do not know whether they received the right money.

Photo of David Taylor David Taylor Labour, North West Leicestershire

That is true. One of the costs of giving priority to the 2006 claims process was leaving 20,000 farmers in limbo, with payments uncorrected, and in some cases unmade. We will not know the effect on those individual claims for some months.

The NFU acknowledges that the RPA is much improved and that better systems and reporting are in place. There is a greater customer focus—thank goodness for that—because one of the main themes that came through from witness after witness to our inquiry was that under the previous arrangements, at least they could talk to someone—a stable, experienced career civil servant or agricultural specialist in a DEFRA regional office—who knew something about the system.

Photo of James Gray James Gray Conservative, North Wiltshire

I hope that the hon. Gentleman is right in saying that the system is much more customer focused and that there is a greater readiness to listen to farmers. However, I was dismayed by a visit to the House of Commons today by my constituents Mr. and Mrs. Young of Pound farm in Purton, because they are among the 2 per cent. who have not been paid at all for last year. They have been missed out completely. They ring the RPA every day—sometimes twice a day—yet they say that they are unable to discover why they have not been paid and what they now have to do. They do not believe that the RPA is customer focused at all.

Photo of David Taylor David Taylor Labour, North West Leicestershire

That is true for a minority of the 120,000 or so claims. I was citing the NFU reaction, which is recognition of a greater customer focus. The NFU represents those making the 120,000 claims, although that includes a small number of people in the position that the hon. Gentleman describes.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

I should like to inform hon. Members that my noble Friend Lord Rooker holds his weekly surgery tomorrow in W3 at 1 o'clock. Any Member can go along with specific cases. He would be pleased to hear about cases such as the one that Mr. Gray has cited.

Photo of David Taylor David Taylor Labour, North West Leicestershire

One of the most useful initiatives taken when my noble Friend took over as Minister with responsibility for farmers has been his surgeries. Many hon. Members have used them; they are an effective innovation, on which we congratulate him. Some problems continue: the RPA is still working with poor-quality data, there are genuine quality control problems at the processing end, and there is a lack of technical knowledge in the RPA of how the SPS works.

The Government must ensure that the RPA is adequately resourced. We have experienced doing things down to a price, not up to a standard. My hon. Friend the Member for Brecon and Radnorshire—as I shall continue to call him—knows that one of the early impressions that we gained from what we saw at Reading was that the place was full of contractors and outsourced staff, who were low-paid and poorly trained. The people who knew about the processes were demoralised by the large-scale redundancies that they had to endure. Even though the RPA would cost even more in the short term, money spent on that would be money well spent in the medium and long term. Of course, 20,000 or so 2005 claims need reviewing as soon as possible.

My heart sank when I realised the RPA was to carry out an across-the-board update of its rural land register. Given all the problems that it experienced in the early months of mapping, and the appalling delivery of RLR maps in 2004, I am not certain that all that will not be repeated if the SPS system does not reach a stable state. The remapping must be done with great caution, but I advise, from a technical point of view, that it should be delayed into the medium term, until the SPS system, which it underpins, is significantly more stable.

I hope that everything will be done in the short term for the 2007 scheme payments. Lord Rooker said that the objective was to pay 75 per cent. by the end of March 2008. We should go further and faster. I believe—and the NFU agrees—that we should pay at least 80 per cent. of the claims by the end of the year. That is a reasonable target. The system is becoming more effective and the staff are becoming more familiar with it. Let us not allow change to disrupt that. We should accelerate the payments so that the 120,000 farmers and their families throughout the country do not have to endure again what happened from early 2006 to mid 2007.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs) 8:18, 9 July 2007

As Mr. Jack said, it is a great pleasure to debate agriculture on the Floor of the House. The Government and the Opposition appear reluctant to use the time available for that. The production of good, safe and secure food, the protection of the environment and opportunities for the public to enjoy the countryside are important for the nation.

I congratulate the Under-Secretary on his appointment. I am sure that he will enjoy participating in a fast-moving sector of industry. Many changes have taken place in the recent past, and more and rapid changes will happen in the near future. I would also like to place on record my declarations of my farming interests that appear in the register.

In preparing for this debate, I thought that it would be interesting to consider the farming industry through the eyes of the younger person. It is impossible for me to do that, given the stage of my career in the industry, so I spent some time talking to young farmers at the royal show, at NFU conferences and in other locations. The average person who would be expected to go into the agricultural industry looks at it in a despondent and unhappy frame of mind. Young people look at the returns and at the commitment necessary to do the job properly, and they see that the two just do not add up. When they see their friends and acquaintances going into other professions, they are discouraged from going into farming. Indeed, at a time when farming is being encouraged to be more business-like, to prepare business plans and to set out cash flows, young people were doubly disappointed that DEFRA could not deliver the single payment when it was expected. They do not want to do business with an organisation that cannot pay on time.

The right hon. Member for Fylde went through a number of the conclusions of our inquiry, but it is impossible to set out the scale of DEFRA's failure in this matter: one only has to consider the other countries in the European Union and the devolved Administrations in the United Kingdom to see how they delivered. They adopted different approaches to the single farm payment, as the regulations permitted. Some adopted the dynamic hybrid, some adopted an area payment straight away and some adopted an historic payment. However, almost without exception, other countries managed to deliver the majority of the payments early in the payment window, which extends from 1 November to 30 June. Most countries were able to deliver within the first two months of that window. The purpose of the window is not to spread the payments; it is to deal with the difficult applications that every scheme will throw up from time to time.

No one would criticise any organisation or country delivering the scheme for being cautious about disbursing public money if there was a doubt about an application. There is no advantage to any country in holding on to the money. No interest accrues to the Treasury of a country, because the money is drawn down from the European Union as the claims are disbursed. There is, in fact, every encouragement for the money and the claims to be dealt with quickly, because that releases staff to prepare the next round of payments. DEFRA fell apart between the 2005 and 2006 applications.

When we took evidence, it quickly became clear to me that the real problem was that DEFRA had decided to adopt a dynamic hybrid at the same time as the change agenda was being taken forward in the Rural Payments Agency. I can understand why DEFRA wanted to go for an area payment scheme, rather than the historic payment scheme, which would more securely decouple support from production. I have no criticism about the extent of that ambition. However, if DEFRA had conducted a risk analysis of the difficulties of delivering not just an area payment scheme or an historic scheme but the dynamic hybrid, that would surely have sent waves of caution through the organisation.

At the same time as DEFRA decided to take forward a dynamic hybrid, change was taking place in the RPA. That change programme, if successful, was going to lead to a reorganisation and substantial savings in public expenditure. The two processes coming together was, I believe, the cause of the problem in delivering the scheme. Indeed, I would not be surprised if the Government said something along those lines in their response to our inquiry.

I visited the RPA in Reading with my hon. Friend David Taylor, as I call him. It was clear that it had been necessary to compensate for the reduction of staff there by employing temporary operatives. The training period necessary for them to become conversant with the system was such that some left before they were fully trained. It was clear to us that the mapping system was a cause of the problems, and one that it would be difficult to overcome.

The relationship between DEFRA, the RPA and Accenture should be re-examined and lessons learned for future IT programmes, because the necessary engagement to make the most of the available talent and resources seemed to be lacking. Indeed, the lack of direct meetings between the RPA chief executive and the then Secretary of State was one of the things that seemed to contribute to failure. At a time when the project was in such trouble, that direct contact was lacking.

Photo of Philip Dunne Philip Dunne Conservative, Ludlow

Does the hon. Gentleman agree that it is little short of astonishing that the chief executive of the Rural Payments Agency had only two meetings with the Secretary of State, one of which was on the day before he was suspended, when the whole debacle came to an end? What accountability is there when, essentially, the Secretary of State washes her hands of the whole business?

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

I agree with the hon. Gentleman. With failure on the horizon and the farming community in desperation about when it would receive the payments, it seems beyond belief that the Secretary of State could not manage to meet the chief executive of the organisation that was attempting to deliver them.

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

My hon. Friend Mr. Dunne and I have just listened to the former chief executive of the Rural Payments Agency, Johnston McNeill, giving evidence to the Public Accounts Committee, which is one of the reasons we were unable to attend the debate earlier. On the question of where the Secretary of State was, I am pretty sure that she was steering well clear. On the hon. Gentleman's earlier point about the relationships between DEFRA, the agency and Accenture, does he not find it strange, as I do, that there were two senior responsible owners, against the advice of the RPA, when the whole idea of having a senior responsible owner for a project is that there should be one person who is specifically accountable? It was as though the Department had tried to drive a coach and horses through the notion of having a senior responsible owner by having one for policy and one for implementation, thereby almost creating part of the problem.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

I agree with the hon. Gentleman. There seemed to be a lack of accountability and clarity about who was responsible for carrying the project forward.

This has been a tragic event for the farming community. The farming business has lost about £20 million but, more importantly, it has lost what little confidence it had in DEFRA. If agriculture is to be successful in future, the Department responsible for it and the business itself must find a better way to combine and work together.

I want to ask the Minister a question along the same lines as that posed by my hon. Friend the Member for North-West Leicestershire. Does he have any plans to bring forward the payments during the payment window? If not, English farmers will simply look at other countries and the other devolved nations in the United Kingdom and see themselves as second best, because they do not get the same service as others do.

I would also like to ask the Minister a question about inspections. In the implementation of the single payment scheme, inspections are important in ensuring that cross-compliance is observed by the applicants, but they are often not well planned. There is frequent duplication, and they place huge regulatory burdens on farming businesses. Will the Minister impress upon DEFRA, the Rural Payments Agency and the Environment Agency the need to co-ordinate their inspection plans more closely, to ensure that, when two inspections can be carried out at the same time, that happens, so that duplication does not occur and farmers feel that the inspections are being carried out with a light but sound touch?

The Government's report, "Vision for the Common Agricultural Policy", was brought out in what seemed to be rather a rush during the UK's presidency of the European Union. In order to achieve a budget agreement, people were talking in fairly strong terms about reform of the CAP, but when the Prime Minister went to look in the cupboard, there was no work on the shelf and there was no report. This document has the hallmark of work that has been done fairly rapidly and without the necessary research.

The common agricultural policy has evolved over the years from the time of the treaty of Rome, when it was built on intervention, through the MacSharry reforms that brought in quotas for breeding animals and for payments for particular crops. I am sure that most right hon. and hon. Members here today will agree that in 2003, under the cloak of a mid-term review, we saw the fundamental implementation of the single farm payment, along with the decoupling. During that period, there have also been reductions in the export subsidies that do so much to distort world trade and such great harm to third-world countries. Export subsidies should be eliminated by 2013. It was the agreement between France and Germany that the common agricultural budget should be maintained to 2013 that led to the agreement on the single farm payment.

The document produced by DEFRA and the Treasury lacks the political nous that should have been present for it to be taken through the European Union. As the right hon. Member for Fylde said, it seems extremely difficult to get this kind of reform through the agriculture Ministries in France and Germany. Perhaps President Sarkozy will have a different frame of mind from that of President Chirac. I think President Chirac was the only one who understood the European agricultural policy, and that was probably because he wrote it.

The movement of funds from pillar one to pillar two is broadly agreed by all hon. Members.

Photo of Michael Jack Michael Jack Conservative, Fylde

The hon. Gentleman refers to the effectiveness of the document, but the only measurable effect was a reduction in the money going to pillar two. Was that a good result?

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

The right hon. Gentleman makes a good point. There was indeed a reduction in pillar two expenditure in that budget. Given that the Prime Minister of this country believed in reducing pillar two expenditure, it seemed a strange result.

The document is not explicit about the effect on the structure of British agriculture or the sustainability of UK businesses. With a huge reduction in pillar one expenditure, I sometimes wonder whether any agricultural businesses will be present to deliver the pillar two objectives of conservation and recreation. Mr. Steen, who is no longer in his place, made a point about the difficulty of conserving upland areas using pastoral management methods of the past. He wondered how the people who enjoy those areas could continue to enjoy them if there were no farmers in the area. The "Vision" document certainly does not address that issue in any way.

The document also fails to address the issue of food security, which it seems to imply is not a major issue to be taken into consideration. Given that the world population is about 6 billion, with 600 million either under-nourished or underfed, and that by 2050 it will have increased to 9 billion, food security is clearly a big issue—not just for this country, but for the world. We should ensure that all areas of agricultural land, here and throughout the world, are put to their fullest use in order to ensure that 9 billion people are well fed and well nourished in 2050. There are real threats to that, including climate change, political instability and the demand for energy crops. A new organisation known as the commercial farmers association has produced a pamphlet promoting food security for the future. It does not argue for supporting British farming through protectionism. Rather, it argues that farming in this country should be supported by research promoting a good balance between output and conservation.

I believe that the "Vision" document was short-sighted and does not merit support. It failed to look to the future of farming either in this country or the wider world.

Photo of David Drew David Drew Labour, Stroud 8:38, 9 July 2007

I am delighted to follow my fellow members of the Select Committee, who are clearly dominating the debate so far. That is understandable, in as much as we have not had many opportunities to debate agriculture in recent times. It is interesting to note that two reports are coming along at the same time. I cannot do justice to both reports, which are detailed and critical, but I hope that the Government will reflect on them carefully. If they do not respond in print, I hope that they will do so in other ways and thereby try to point us in the right direction. I do not want to go over the same ground as my colleagues, so I shall try to keep my remarks brief and slightly different from those previously expressed in our interesting discussion. I hope that there will be plenty of time for reflection on the debate itself and on subsequent developments.

I would like to start with the report on the Rural Payments Agency. The words "disaster", "debacle" or even worse could be applied. I believe that the fundamental mistake was trying to bolt together the dynamic hybrid. Discussing the scheme with my hon. Friend David Taylor, I described it as a camel sent into the desert with no sign of an oasis. It was a difficult concept and, notwithstanding all that has been said by those on the official side, no one has yet identified its genesis to my satisfaction. There was no consultation on it and certainly no consensus behind it, and not surprisingly it bombed. It is of course possible that in due course it will be seen to possess some logic, and that other nations will follow us. In fact the Germans did adopt a similar route, but as was pointed out by the Chairman of the Committee, Mr. Jack, they were better able to deal with the practicalities than we were, and we failed to learn from their example.

It was a mistake to move to an area-based payment system while also trying, for a number of years, to retain an historic system. It was inevitable that that would raise questions about what could be described as the wedding-cake principle. If more people demanded slices from the wedding cake, the slices were bound to be thinner, and some would not be given even a crumb of comfort.

That returns me to the fundamental criticism that I have advanced throughout our debates in the Chamber and the Select Committee. I believe that it should have been established at the outset which people were farmers and would be entitled to participate in the single payment scheme. That was never clearly spelled out, and the Government appeared somewhat taken aback when 50 per cent. more people than they had accounted for claimed entitlement. Five per cent., 10 per cent. or even 20 per cent. would have been understandable.

I still begrudge, and will continue to begrudge, the money that should be going to farmers and is going to others who are not farmers, do not need it, but are able to draw it because of the crackpot way in which we introduced the system. That has made the position even more complex and has prevented genuine farmers from receiving money, which is unacceptable. I hope that the Government will consider a de minimis, because the very small sums that have been received have snarled up the system.

I will not say much about the management of the agency and the IT systems, because Members on both sides of the House have already made plain that both were deficient. However, as the right hon. Member for Fylde pointed out, it would have been helpful if the Government had listened to the points that we made during the run-up to the agency's establishment. They were not criticisms at that stage—they were useful points—but they were ignored, and the Government paid the price. Many of us spent a great deal of time trying to bring about a sensible, positive understanding of what was happening, but Ministers pushed our suggestions aside and pooh-poohed our competence to make them.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

My hon. Friend made a telling point about the failure to predict the number of applications, but does he not agree that by the time the Committee was issuing warnings the number was known, and that even at that stage the Government did not listen to the alarm bells that we were ringing?

Photo of David Drew David Drew Labour, Stroud

Once it became clear that the number of eligible people had been drastically under-calculated, we quickly pointed out what some of the repercussions would be. Even at that stage, Ministers, if not officials, were to a certain extent living in denial. Our criticism should have been dwelled on rather than pushed away, which, sadly, is what happened.

Photo of Philip Dunne Philip Dunne Conservative, Ludlow

Was not one of the Committee's warnings to do with the mapping system and the fact that many mapping errors arose as a result of using a two-dimensional mapping system rather than a three-dimensional one? In many areas, particularly along the Welsh marches which are well known for having three-dimensional fields, that has given rise to many foreseeable errors.

Photo of David Drew David Drew Labour, Stroud

I am not sure that I can answer that in practical terms, but it seemed to me that the system was sometimes fifth dimensional, as there were so many errors. It was particularly galling that when it got things right, it subsequently returned to them and got them wrong. There was no consistency in the information; it was a case of garbage in, garbage out. Sadly, even when the information was initially right, it was subsequently screwed up, which was completely unacceptable and led to people having no confidence in what was done. I could go into considerable detail on that matter; in fact, we did so, and the people who briefed us explained what the problems were—but, sadly, the solutions were more difficult to identify.

There was not much vision in the other document even though it was called "Vision for the Common Agricultural Policy". We swiftly identified that it appeared to have been produced not by the Department for Environment, Food and Rural Affairs, but by the Treasury. Therefore, it was strong on economics but weak on societal and cultural aspirations, which should be central in moving from a common agricultural system to, we hope, a common rural policy. It was, at best, a fudge.

It was interesting that the Government again said that they had listened to, and reflected on, the views of many in the farming community. We attended the Royal show last year. It must have been better than this year's Royal show as we had sunshine; I am thankful that we did not visit it this year as we would have had to have worn our Wellington boots. We took evidence from ordinary farmers, and that was interesting as they expressed thoughtful opinions on what should be our future agricultural policy.

We addressed in the report whether it was possible to have a common agricultural policy. I have doubts about whether a common policy can exist, and certainly about whether it can do so in a European Union of its current size—although I cannot complain about that as I supported enlargement. We addressed points of analysis and dissection, rather than of underlying philosophy. I am sure that my hon. Friend Kelvin Hopkins has trenchant criticisms to make of the whole concept of the common agricultural policy, and I share them. However, the Committee looked at how we might move to a different system—how we might move from pillar one to pillar two.

A key problem was that we led that charge alone. Although other nations might speak the language of wanting to move away from production subsidies, when push comes to shove and their politicians are faced with the question of whether to defend the important franchise of the farming community—it is less important in our country than in some others—many of them fall back on defending the production subsidy system. Sadly, too many other nations take that position, and until they change their underlying opinions the common agricultural policy will be a dead duck, and the sooner we fry it the better.

The document was short on vision and did not say where the Government wanted to go, even though—to be fair to them—they had gone much further than other countries, as I have already said. The document did not make us feel as if we knew where we were going. As Mr. Williams said, it would have been good to have looked in much more detail at food security issues. As it is a historic document, things have moved on and we now have to face up to non-food crops and the implications they have for the rural economy. There were various issues that needed to be embraced and the weakness of the document was that it did not look to the future. It looked to the immediate problems that British farming faces, but we wanted to stretch out from that so that we could provide leadership to the rest of the EU. That was lacking, and therefore we missed a real opportunity.

Photo of Mark Todd Mark Todd Labour, South Derbyshire 8:51, 9 July 2007

I shall concentrate on the first of the two reports, partly because my period of service on the Committee coincided with the start of the change programme that is commented on. I can recall both the interview of Johnston McNeill by the Committee and the discussion of the initial stages of the change programme. Indeed, the Chairman of the Committee recalled some of my expressions of scepticism about what was being attempted and whether that particular gentleman was the right choice to lead such a programme.

The episode under consideration was undoubtedly one of the most woeful episodes in both business change and system development of the last decade. It has a lot of competitors, unfortunately, but it is certainly in the top two or three, if not actually top. Some hon. Members may not know this, but before I became a Member of Parliament I was an IT director, so in the words of my hon. Friend David Taylor I am the person with one eye among those who are blind on some of these topics. My experience is out of date, because we are 10 years on, but I do have some broad knowledge of leading large system and business change programmes. Occasionally, I try to share that with the House, although not always with a great deal of effect.

What I learned about this programme was a shocking level of risk analysis, which permitted a complex and extremely challenging change programme for the administration of any rural payments scheme. At the start of the process, in 2001-02, we did not know what lay ahead, but we started on a process of major change in the way in which payments of any kind would be made to the farming community, and we combined that with the introduction of wholly new methodologies for payment. Even the most primitive of analyses would have highlighted the hazards. I shall list only those that struck me from looking at the issue. They included locational change, substantial down-sizing of personnel and layers of system development. Probably from the start in 2001-02 through to the end, there must have been at least three system development programmes of various kinds to build systems that worked in delivering payments to farmers. Change was laid on change; when a decision was made on the process, there were further changes.

There was also an extraordinary programme of inclusion, which my hon. Friend Mr. Drew mentioned. One landowner did not make a claim; I own five acres of Derbyshire and was told by my farming friends that I should make a claim under the system. I am delighted to say that I did not; that was one claim that did not clog up the system, but it illustrates how ridiculous the design was. I hold five acres, which I occasionally graze—I make a mess of it generally—and it has a footpath through it. Why in heaven's name should I expect a few hundred quid from DEFRA towards it? Yet that invitation was sent to everyone and I am afraid that not everyone was as self-denying as me. Not surprisingly, the system was clogged with tiny claims that must have cost far more to process than the sum paid out.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

I understand my hon. Friend's frustration. He has saved the Department some money by not claiming. However, I am advised that the EU definition of a farmer includes simply keeping land in good agricultural and environmental condition.

Photo of Mark Todd Mark Todd Labour, South Derbyshire

Indeed so, and all member states grappled with the dilemma of how to deal with rather small holdings of an inactive nature. They did not attempt to handle those claims in exactly the same way. As I recall, there was a de minimis approach, which would have made it possible— [ Interruption. ] I am seeing lots of nods, including, I think, from the Minister himself. That would have simplified the process and I would have commended that. It might not have prevented people from making a claim, but it would have made it much simpler to deal with them.

Faced will all those layers of risk, the most obvious strategy was a simplification of what was to be attempted. We have just touched on one example. One would not have chosen one of the most complex models for payments—that of combining two different forms of data and then shifting it over a period of time. Clearly that would require a far more difficult design than a number of the alternatives. Mr. Williams, rather kindly, did not go into detail about the rather simpler approach that he must have enjoyed in his native country, which led to successful payments on time and without hassle. One might have thought that that would have occurred to people in designing the system. Instead of idealising where we might be going, a pragmatic approach of designing something of lower risk should have been dominant in the minds of the ministerial and departmental teams.

Photo of Michael Jack Michael Jack Conservative, Fylde

Does this not raise a serious question as to the advice that was given to Ministers when the policy was being negotiated and the seeming lack of any advice that said, "These are the implications of what you are agreeing to"?

Photo of Mark Todd Mark Todd Labour, South Derbyshire

One might indeed say that. One can only speculate as to what advice was given on the implications of making this already difficult process of business change more complicated still.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

Does the hon. Gentleman agree that even if DEFRA had wanted to go down the dynamic hybrid route, it could have postponed that move for a year and simply used the existing, well-established schemes?

Photo of Mark Todd Mark Todd Labour, South Derbyshire

The hon. Gentleman is right. There were many opportunities to make the process simpler, even in some of the idealistic choices that were being made.

I add a further layer: even after the choice to have a more complex model was made, that choice was not stuck to. Instead, there were several flexes and changes, albeit for perfectly good reasons—people said, "What about this or that?", and changes were made. If choosing the dynamic model was almost suicidal, to permit wilful change after that point was actually suicidal and would have doomed the project to failure in any professional eye, although I cannot imagine which professional eyes were looking at it, because it is startling that the level of risk was not thought through and shouted from the rooftops for all to hear.

I attended an Adjournment debate on the fiasco in the spring of last year—I think that Mr. Jack was there—in which the responding Minister, who had taken over responsibility for the task in the Commons, read out a number of the changes that had been made to simplify the process of handling individual claims. I remember intervening to point out that surely many of those steps could have been taken right from the start. One issue was the obsessive pursuit of tiny, trivial errors within a claim, relating to the precise area of the claim and other such matters. Those steps were not demanded by EU law; we had imposed them, in our usual, determined attempt to set a platinum standard for our administration of a system in this country. It was good of the Minister to be so candid about the changes that were being made to make it simpler to pay farmers, but it did lead one to wonder why anyone would design a system containing that kind of obsession, which would again accentuate the cost of the process and the risk of failure.

The National Audit Office report is useful in cataloguing the review board's reports on risk and the gateway reviews of the Office of Government Commerce. I do not know what that showed observers within the Department, but outside the Department, it painted an alarming picture of repetitive emphasis on risk and the difficulty of maintaining the project to deliver payments to farmers on course and on budget. No one with even a cursory knowledge of the reporting mechanisms for the project would have found it surprising that it was running into desperate difficulty and crisis. One can only wonder what those who received the documents ever did with them—a point to which I shall return briefly.

The OGC may not be above criticism, and the Select Committee correctly highlighted some possible areas where it went wrong, to which I add one from a more technical perspective. I do not think that the OGC looked properly at the balance between business change—the human process side of getting people to do something in a particular way—and the system development element, which would allow those people to do those tasks more readily. In business change, those two elements are a seamless activity; to treat them in a discrete way, as the OGC does, to some extent, by saying, "This is a systems project," risks the possibility of grave management error. The OGC analysis does not highlight firmly enough some of the failures regarding how human beings were expected to do certain tasks.

So what are we going to do about this? What do we learn? First, it should be clear that reports that show such a risk should not merely be owned within the Department to which they are written. It is quite obvious that Departments have widely varying competences for managing major projects, and this Department had a very low competence. I have had some unkind exchanges with the Department's former permanent secretary about his apparent lack of knowledge in this area. I did not think it was a good sign when he was first interviewed on information systems issues, and I do not think that he was well equipped to be a challenging leader of a Department going through such a process of technology-enabled change. So this should have been shared more widely.

Secondly, we need to be constantly aware that these are not systems projects: this is a business change programme, starting way, way back. There is a long history, and it needs to be seen as a totality. We develop systems to help people to do a job better—they are not there for their own purposes—and we need to understand the process of managing the human beings far more in some ways than we need to be obsessed with the details of the technologies being used.

Photo of David Taylor David Taylor Labour, North West Leicestershire

I am grateful to my hon. Friend and near neighbour for giving way. He has been talking about the human impact of the changes that were taking place. Does he recall the figures? Of the 3,500 staff in the Rural Payments Agency, it was planned that 1,600—almost half—were to lose their jobs during the change programme process. That is likely to have a seriously deleterious effect on morale, is it not?

Photo of Mark Todd Mark Todd Labour, South Derbyshire

Indeed so. I accept that entirely.

There are other areas to focus on, the first of which I have touched on. When people define what they are doing, the project management must be robust in resisting change. To permit constant adjustment in a major project builds risk every time that it happens, and I see that mistake repeated endlessly in such systems and process change projects.

The final point I want to make is that change management is a skill, and when we appoint people to lead programmes of major change, we must be aware of the challenges and the tasks that they face. I cannot believe that enough thought was given to the capabilities of the individuals who were asked to lead this project when they were appointed. These are not trivial tasks of normal, ongoing senior management; they require a level of human leadership, technology awareness and project management that very few people have, and those mistakes were innate to the project right from the beginning.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 9:08, 9 July 2007

I congratulate my hon. Friend the Minister on his appointment, and I look forward to many future debates with him on these and other matters.

I want to address the broad issue of the CAP, and the Select Committee's fourth report refers to the "Vision for the Common Agricultural Policy". I have spoken several times in the Chamber about the CAP and have made many of the same points before, and I think that they are still valid: the CAP is nonsense and should have been abandoned a long time ago. I hope that it will be abandoned and replaced with a much more sensible agriculture policy. That is the broad thrust of the second relevant document. It may have been written in the Treasury, but perhaps the Treasury has got it right. It talks about the vision for the CAP, but perhaps "CAP emerging from the darkness" or some such title would have been more appropriate; vision sounds rather too exciting.

To go back in time to 1980, when I wrote my first policy paper on the CAP, I suggested at that time that it ought to be abolished. I have not changed my view in all that time, and I have written many further papers. I recall, among other things, a substantial report by the National Consumer Council in the 1980s, which said how bad and damaging the CAP was, particularly for British consumers. Since then, I have participated in debates in the Chamber and I have made the point many times in European Standing Committees. More recently, I have made it in the European Scrutiny Committee, where we recently interviewed the former Foreign Secretary.

If one repeats a message that has some common sense at its heart, eventually it is taken notice of, but it takes a long time and many voices. Mine is just one voice. In the recent debates about international trade, the righteous anger of the poorer nations, which have been so savagely affected by the developed nations' protectionist policies in agriculture, is starting to have some effect. Abolition of the CAP is the way forward.

Photo of Bob Spink Bob Spink Conservative, Castle Point

The hon. Gentleman is generous to give way, considering that I have just come into the Chamber. While he is reminiscing, does he recall that the Government's policy on the EU budget was three-pronged? First, they wanted to limit its size as far as possible; secondly, they wanted fundamental reform of the CAP; and thirdly, they wanted to retain the rebate. Is he sad that there has been abject failure on all three counts?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I shall come on to some of those points. I will make at least one of them quite strongly later, but I do not have much time, so if Members will forgive me I will plough onwards.

The first sentence in the summary of the report states:

"The objectives of the Common Agricultural Policy...have remained unchanged for...50 years and are now an anachronism."

They were an anachronism even quite a long time ago, and they certainly are now. That is an understatement. The fact is that the effect that the CAP has had both on the British people and on the rest of the world has been a disgrace. The Government's "Vision" paper says that they look towards an agricultural industry that does not rely on subsidies or protection. That is almost the opposite of the CAP. I would not go quite that far, because it is legitimate for nation states—member states of the European Union—to subsidise agriculture selectively where appropriate for all sorts of social reasons, and to ensure security of supply for our own food. There are reasons to subsidise and sometimes to protect, but that should be done at national level, because the agricultural systems in every country in the European Union are quite different. We are one of the least agricultural countries in terms of the size of the industry, but our industry is still important.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

If we had different forms of support in different countries, how could we have a common market and free trade between the countries?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

By definition, if one has some degree of protection, that is not quite free trade. We have absolutely no free trade in agriculture at the moment. I am not suggesting that we should have free trade in agriculture or that we should take away all subsidies and all controls. It is a fundamental industry, and there are all sorts of strategic reasons, as well as social reasons, for wanting to sustain it.

We had the Doha round, following which there was very little change, and the UK presidency last year, when again there was an attempt to get some sort of change after President Chirac attacked Britain over our rebate, following his failure to win his referendum. He wanted to lash out at somebody, so he lashed out at us. I suggested in the Chamber—I think that I was the first—that the Prime Minister ought to say, "Okay, quid pro quo: you get rid of the CAP and we'll forget about our rebate." We would not need a rebate if there was no CAP. Of course, that did not happen. At the end of the day, the Prime Minister agreed to a settlement with almost no change in the CAP and a substantial increase in our net contribution to the European budget for the future. It was such a poor settlement that even The Economist was moved to say that no settlement would have been better than that settlement.

The argument was that we should help eastern Europe. I am happy to help poorer nations, and if we have to have fiscal transfers from the richer nations to the poorer nations, that is fine, but they should be open and above board so that we know what we are doing. What we have through the CAP is, sometimes, fiscal transfers from rich countries to richer countries, such as Denmark. That is not right. If we are going to give assistance to the poorer nations of the EU, we should do so on a simple basis so that contributions and receipts are proportionate to the relative prosperity of different nations. That would be a fair system, and I have suggested it many times in debates. Indeed, about a year ago, I noticed in the small print of one European document that was debated in the Chamber that that proposal was specifically rejected. I do not know whether it was just my suggestion that had been rejected, whether the message had been picked up, or whether other people, too, were articulating what, to me, was a sensible proposal.

The cost of the CAP to the UK is enormous. As a result of the settlement last year, our net contribution will go up from £4.7 billion in 2007 to between £6 billion and £7 billion in 2013. We can still subsidise our own agriculture, and we will be much better off in Exchequer contributions. Without the rebate, we would pay £12 billion this year, increasing to £20 billion by 2013, so the rebate still makes a difference. At the same time, however, we are making a substantial net contribution simply because of the cost of the CAP. Food prices are important, too. I speak as a representative of a purely urban constituency—I have no rural interests at all—but my constituents have a strong interest in the CAP, because they pay vast sums of money in higher food prices every year. It is estimated that the CAP costs £15 billion a year extra in food prices to consumers in Britain—£250 per person, or £1,000 for a family of four. For some families in my constituency that is a lot of money. It might not mean so much to more affluent people, but to some people in my constituency it means a great deal. If we want to change the net fiscal transfers, let us do so on a much fairer basis.

The Select Committee report says the Government should

"direct the debate towards scrapping the existing CAP and replacing it with a 'Rural Policy for the European Union'."

Fine; we have made progress, if the Select Committee is urging the Government to proceed in that direction. I absolutely agree. The rural policy has not been specifically defined, but the repatriation of agricultural policy could give us a very good rural policy and save us vast sums of money in the process. It would be fairer, too, to the developing world, which produces food much more cheaply than we can. We could import food from developing countries, rather than having to choose more expensively produced food from the EU.

We have a problem, because the UK is constantly talking about reform, but other countries in the EU are constantly resisting it. Perhaps that is partly because they benefit a great deal from the CAP—it is a disbenefit for us—but they appreciate, too, the fact that it is part of the glue that holds the European Union in its current tight arrangement. I would like to see—I have said so many times, and many Members agree—a much looser arrangement in the EU of independent member states co-operating on a voluntary basis for mutual benefit, instead of something governed by bureaucracy from the centre, and by a budget over which we have very little control.

May I read a final quotation from the report to show the problem? On page 8, the report cites continental politicians who have commented on Britain, and says that a

"German farm leader accused the UK government of 'poisoning the political atmosphere' in 2005 with its constant attacks on the CAP."

If that is the tone, even raising the issue is "Don't mention the war" stuff. Unfortunately, the softly-softly approach advocated by Mr. Williams will not work.

We are the country most likely to launch reform, so we must drive it through. We must set a date by which we expect the CAP to be abandoned and replaced by a more sensible approach to agricultural policy in Europe—and, indeed, in the rest of the world. No other country will take the lead; we have to take it, and we are best placed to do so, because we suffer discrimination and disbenefit as a result of the CAP. It is therefore our job to do it.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs) 9:19, 9 July 2007

I declare my interest, which is set out in the Register of Members' Interests, minuscule though it is. I confess that I did not have the willpower of Mr. Todd

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

Not a lot more.

May I welcome the Under-Secretary of State for Environment, Food and Rural Affairs, Jonathan Shaw, to his first Front-Bench post? I know that he has been a Whip, but this is his first ministerial position. If this is his first outing as Lord Rooker's spokesman on Earth, we look forward to further discussions.

I congratulate the Environment, Food and Rural Affairs Committee on producing two excellent reports. As Sir Peter Soulsby said, it is a great shame that the Government's responses, which I understand have been forwarded to the Committee, were not produced in time for the Committee to publish them. As a result, the House cannot consider the responses tonight. It would be wrong of me to seek to repeat all the points made by the many hon. Members of all parties who have spoken. It is fascinating that all the Government Back Benchers who spoke on the report on the Rural Payments Agency totally endorsed the report's criticism. As has been said, that criticism is extremely trenchant. When a Select Committee, acting unanimously, uses adjectives of the sort found in the report, it demonstrates how serious the situation is.

The hon. Member for South Derbyshire, using his professional knowledge, explained to the House where many things went wrong in the management of the change, and the management of the delivery of the single payment system. The problems with the SPS started with the mid-term review. I want to make it clear that the Opposition supported the principles behind the changes, and the principle of decoupling support from production. Our only criticism is that the changes did not go far enough. I will return to that point when I move on to discuss the second report.

We also supported the later decision to adopt a dynamic hybrid. Some of the reasons that the Government gave for the decision were right: it is difficult to justify paying people in 2012 for what they did 10 years earlier, and it will be easier to move to whatever happens post-2012 if such a change is made. However, as the report rightly says, the dynamic hybrid was apparently adopted in year 1, after the Government made the decision to start the process. As several Members have said, many of the problems could have been alleviated if we had delayed the start. I am convinced that that is where the main problems began.

As we have heard, the programme involved the extension of the scheme to massive areas of land and to many more farmers, but there was no recognition of the impact. That resulted in 48,000 extra holdings, and 360,000 extra parcels of land having to be registered. It is an odd way of weaning an industry off subsidy suddenly to give the subsidy to people who did not have it before, but that seems to be the policy that was adopted. As we have heard, the Government did not adopt the de minimis figure of €100, although that would have taken out 14,000 claimants. Indeed, I would have supported a much higher de minimis figure. As we heard, two months later, it was decided—albeit as a result of pressure—that a third region would be added. That came on top of everything else.

Many issues remained unresolved. Those of us who were watching events or were involved at the time were conscious of discussions on what comprised an orchard, and on fruit, vegetable and potato permits and to whom they belonged. All those problems continued while the RPA was allegedly trying to set up the necessary systems. As my right hon. Friend Mr. Jack said, on 19 January 2005, the RPA announced that payments would be delayed. It is interesting to note that the then Secretary of State, Margaret Beckett, said a year later that

"In 2004—05, the RPA met all its key performance targets".—[ Hansard, 2 February 2006; Vol. 442, c. 452.]

As that covered the period when the RPA said that payments would be delayed, it raises the question what performance targets it had apparently met.

During 2005 it became increasingly clear what the problems were—the wrong maps sent to the wrong farms. Sometimes even maps from the wrong counties were sent to farmers. As others have said, fields were added to a farm that had been missed off one set of maps, and other fields were missing from the next set of maps. There was chaos, yet according to the public face of Government everything was going well. Ministers, as we have heard, especially Lord Bach, constantly criticised those of us who said that there were problems. He said that we were causing

"unfounded alarm and uncertainty in the farming community".

As early as that same day, 19 January 2005, in the House I called for interim payments. Later that year on 9 June the then Secretary of State said that she was not ruling them out. We know the rest. The Government did not make the decision to introduce interim payments until April 2006, nearly five months into the payment window. Clearly, there were serious problems.

I have a number of questions for the Minister about the present, but before I come to those, I want to make one point. The fundamental cause of the problems, aside from the difficulties of managing change, was that no Minister understood the industry that they were dealing with, nor, it seems, did any of the civil servants who were making decisions or giving advice to Ministers. No one seemed to realise the complexity of the dynamic hybrid and that it would take much more time. As the Secretary of State said repeatedly, they underestimated the number of new claims and the amount of land.

Given the definition of a farmer that we heard from the Minister a few minutes ago, one wonders why those in DEFRA did not seem to understand how many thousands of people there were out there who, like Mr. Todd, own a few acres of England and might therefore register and claim. It is not just people who own 5 acres. In my constituency, in the horseracing sector, all the stud farms suddenly became eligible.

When all the problems were reported, no Minister seemed to have the gumption to go out and ask searching questions about why they were getting all those reports, or to go out to farms to look at the forms that farmers were being asked to fill in, and to see the maps that were being sent round and the chaos caused by inaccurate mapping. The Department was full of urban Ministers with no idea of the industry that they were dealing with. The situation was summed up on 2 February 2006 when, in an oral question, I said that the scheme was complicated, and the Secretary of State replied:

"The hon. Gentleman says that it is a complicated scheme, but that is misconceived."—[ Hansard, 2 February 2006; Vol. 442, c. 454.]

I fear that she did not grasp the complexity of what she was doing.

The final insult to the industry was that that Secretary of State, who was ultimately responsible for the chaos and the shambles, was promoted to Foreign Secretary. As somebody might have said, when she had done her worst, the caravan moved on.

It is worth pointing out, as other hon. Members have, that Germany also adopted a dynamic hybrid scheme and did not face similar problems, which proves that the scheme itself was not the fundamental problem.

In the recent supplementary estimates—this is an estimates debate—the Department has been given £305 million, set aside to cover the costs of the debacle in the form of fines and disallowance from the EU. A recent written answer that I received used the figure of £70 million. In his response, will the Minister give us the Government's latest estimates of fines and disallowances from the EU for the years 2005 and 2006? If it is as high as the £305 million set aside, that would equate to some 8,500 police officers, which the same rural areas would very much value instead of paying fines to the EU.

What is the up-to-date position on claims that are being reviewed? There are 20,000-odd claims for 2005 where we still do not know—and, more importantly, the individuals concerned do not know—whether people are going to get money back or be given any more.

On this year's payments, 75 per cent. by value by the end of March is an improvement on where we have been before, but it is still woefully inadequate for the third year of this scheme. This year, the Government, or the RPA to be more precise, demonstrated that interim payments do not necessarily delay the final payment—one of the excuses given in the past. When we look back, we find that although interim payments were paid for some months this year, once the RPA pressed the button to pay the rest of the money it all went out in about three weeks. I therefore suggest that there is nothing to stop the Government producing interim payments before Christmas this year. The National Farmers Union is calling for 80 per cent., although I believe that EU rules might restrict it to 50 per cent. Certainly, I strongly believe that an interim payment needs to be made before Christmas. That would be proof that this new team of Ministers really wants to make a change for the better.

For 20 or probably 30 years, all political parties in this House have called for reform of the CAP, and I am afraid that much of that historical rhetoric remains when we hear about the cost to the taxpayer and increased food prices. Indeed, we heard a little of it from Kelvin Hopkins. Much of that rhetoric ignores the dramatic change of 2003—the biggest change to UK agriculture policy since the introduction of guaranteed prices in 1947. That was the end of the state fixing, in one way or another, the price that farmers receive. There was a widespread belief, which was obvious in the remarks of the hon. Member for Luton, North, that cutting market support would cut food prices. It is ironic that for two of the major world commodities—grains and milk powder, where there is now little market support—there have been dramatic increases in world prices over the past 12 months, not because of market support but because good old traditional laws of supply and demand. It is odd, given the "Vision" document, that in 2003 the Government praised the mid-term review, but then said in 2005 that it needed much more reform.

We need to understand that the CAP is as much a social policy as an economic policy. Those who founded it before we joined what was then the Common Market did so for social reasons. In negotiating the changes that we still believe are necessary, it is important that we understand where the others are coming from. The "Vision" document clearly failed to do that in substance and in process. Its publication, without any consultation, just two weeks before the budget summit, demonstrated a complete failure to understand the real intricacies of the CAP. I share many of the Committee's views. It was an ill-thought-out document, it was based on many out-of-date facts, it did not fully recognise the changes that had been made, and the Government had no idea how to make it work. Then there was the incredible hypocrisy of cutting the pillar two rural development money by some €400 million, while at the same time, as we understand from discussions in Brussels, losing the opportunity for a rebasing of the mechanism for spending that money.

The Opposition's view is that the original reform is not sustainable. The budget pressures, including the transition arrangements for the new member states, mean that there will be a reduction in the single payment system by 2012. From the farming industry's perspective, it is vital that the industry can, sooner or later, hold its head up and stop for ever apologising for and justifying the need to have public money. It needs the ability to plan in the long term—it cannot just turn on the tap and produce more widgets or whatever. Keeping cattle, for example, requires three or four years between an animal being born and it going into production.

We need long-term stability, and it has to be based not just on money, which seems to be the guiding factor in the "Vision" document. Much more fundamentally, it is a question of what we want from our land. On that point, I agree with the hon. Member for Luton, North: it is a matter for not just rural people, but everybody in this country. More than 70 per cent. of the land in this country is farmland, and what we do with it makes a difference to everybody. There have been great changes since the 2003 review, such as the development of biofuels and the argument about food versus fuel. There has been a drought in Australia, which was the partial cause of the shortages I referred to earlier. Rising demand from India and China, as they become more prosperous, has led to a reduction in world grain stocks, which are now at their lowest level for many decades.

Of course, there has also been increasing recognition of the importance of climate change and its many implications. It is a question of not just agriculture's contribution to climate change, but the effects of that change on agriculture. Of all the crop land in the world, 70 per cent. is at or close to sea level, and is, therefore, very susceptible to the impact of rising sea levels due to climate change. In the UK, 57 per cent. of our grade 1 land is less that 5 m above sea level. We cannot ignore that.

The fundamental problem with the "Vision" document, therefore, is where it states that

"domestic production is neither a necessary nor sufficient condition for food security."

That statement should not be a surprise. At the Royal Show in 2003, DEFRA put out a statement saying

"National food security is neither necessary nor desirable".

That approach sits ill with the Government's view on energy, about which they are rightly much more concerned, but it also ignores the changes in world supply and demand to which I referred. It ignores the issue of the carbon footprint of food, which is distinct from the issue of food miles. It ignores the environmental degradation taking place in other countries in the world in order to produce cheap food for Britain and elsewhere in Europe.

By the phrase "food security", we mean not self-sufficiency in the old-fashioned way but the capacity to produce a significant proportion of our food. That means retaining the necessary infrastructure and investment so that if the market demonstrates a shortage through the market signal of a rising price, as it is with grain and milk powder, what matters is that we have an industry to respond to such signals—if such an industry is left. That "if" is the Government's responsibility.

Land has other roles apart from food production. It plays a role in producing our energy, it is the location of many of our leisure pursuits and it plays a major role in water management through flood prevention, and the retention of water in our wetlands by getting it into aquifers rather than letting it run off to sea. It plays a role in relation to the environment and biodiversity. We need a holistic approach to land management and land policies.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

I am sorry; I really do not have time.

Next year, we have the health check of the CAP. The first priority must be total decoupling throughout all countries, and in relation to all commodities. There is also no need for production controls, so we wish to see an end to set-aside; we strongly support the National Farmers Union's call that it should be reduced to zero next year. The phasing out of export subsidies needs to begin, we need to see the end of ridiculous regimes, such as the one dealing with tobacco, and we want an increase in compulsory modulation. Beyond 2012, we need to move on and ensure that support for public goods comes through the pillars that allow that to happen. That means "pillar two" in today's jargon of the CAP and the ability to make direct payments. If there is to be enough money in pillar two, we must increase compulsory modulation, matched by a decrease in voluntary modulation. After 2012, we believe that there is increasing justification for co-financing, which would go some way towards tackling the budget and the rebate—they rightly worry the hon. Member for Luton, North.

A common theme has run through the two reports that we discussed tonight. It is clear that the Government have no natural feel for or understanding of land, farming or the uses of our countryside. The Committee has done the House a great service in bringing the issues to our attention.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs 9:40, 9 July 2007

I thank hon. Members for their kind words of welcome to me in my new post. It is a privilege to have it, and I approach it enthusiastically. I look forward to the challenges ahead.

Mr. Paice said that I was Lord Rooker's spokesman on earth, but given the impression that we heard from the Chairman of the Select Committee, perhaps he was trying to be my noble Friend's spokesman on earth. It was a good impression and those of us who know my noble Friend well realise that he would have enjoyed it.

First, let me deal with the report on the Rural Payments Agency and the implementation of the single payment scheme. Sadly, I need to begin by apologising for the delay in responding to the Select Committee's report. The Government's response was sent on Friday, but although Committee members may have had a chance to read it, I appreciate that other hon. Members will not. Of course, it has not been published yet. The problem, given the issues that the Committee's report outlined and that were discussed extensively this evening, is that they simply were not departmental matters, as the Chairman said. It was necessary to secure advice from elsewhere in Whitehall. Although that is not an excuse for breaching the normal convention of responding in two months, I hope that hon. Members appreciate that recent ministerial and machinery of government changes have diverted the attention of those responsible for the past couple of months.

However, let me consider the substance of the report. I have come fresh to its contents and it is clear that it is a thorough piece of work—I genuinely thank Committee members for their evident efforts in producing it. It reflects the feeling of the farming and rural community about the failures of the Rural Payments Agency and the single payment scheme and the effect on farmers throughout the land.

I cannot pretend that the report made pleasant reading. Along with the National Audit Office report, which I read in preparation for the debate, it makes clear the scale and nature of the problems that the delays in implementing the scheme caused to individual farmers and the rural community generally. I am grateful to the NFU president, Peter Kendall, who arranged for me to speak to some farmers who were affected by the scheme. I understood from them exactly what those delays meant, especially the cash flow problems that they caused. I therefore add my apologies to those of other Ministers involved for the distress that has been caused by that failure.

Clearly, lessons need to be learned. My hon. Friend David Taylor did not want me to say that, but I must say that it is true. We set out in the Government response some of the lessons, which a wider review of DEFRA's governance structures and its delivery bodies has taken up. The agency has taken others forward in the way in which it processes claims and communicates with its customers. In particular, the change from task working to whole-case working means that a claimant now has a named official who is responsible for their claim. A number of hon. Members raised that issue. A farmer could make a claim that could be dealt with by any number of people and in any number of the five different offices. That was simply unacceptable and a recipe for chaos.

Photo of Eric Martlew Eric Martlew Labour, Carlisle

I congratulate my hon. Friend on his promotion, which is well deserved. He knows Carlisle well and is aware that we have a large Rural Payments Agency office there. I am sure that he would not attribute any of the blame for what has gone wrong to the people who have been making the calculations. I wonder whether he would visit the Carlisle office next time he is in the area to see how hard-working the staff are.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

I am grateful for my hon. Friend's words. He is right. What he have heard this evening is that a complicated system was introduced at the same time as a radical change. I have read through the evidence from former Ministers and, as has been said, had they thought more clearly about the issue and had the foresight, it would perhaps have been clear that introducing such a scheme was not the right thing to do. The consequence has been the difficulties that we have seen. I pay tribute to the hard work of the staff of the Rural Payments Agency and in particular to that of Tony Cooper, the interim chief executive, who has turned the organisation around and is making a real difference to staff morale. He makes visits regularly, has welcomed the challenge and deserves our support and thanks, as do the rest of the staff.

Photo of David Taylor David Taylor Labour, North West Leicestershire

We need to underline the fact that on each and every occasion, from the first visit of the rapporteurs to the signing off of the report, members of the Committee did not attribute any blame to the tattered and bloody remnants of the 3,500 staff with whom the whole process had started or to the losses that they endured. We attributed the blame to the generals who had led them into that unwinnable struggle.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

My hon. Friend makes his point in his characteristic way.

Senior DEFRA officials worked closely with the RPA chief executive and his team in pursuit of the objective that the Government had set out. However, responsibility for delivering the scheme and for advising Ministers on the RPA's ability to meet the timetable rested solely with the chief executive. There have been criticisms, which are highlighted in the report, about the alleged fact that there were two people at the helm and about whether that would lead to additional problems. We recognise that and we must accept those criticisms.

Looking forward, I am afraid that there will be no quick fixes to the issues faced by the agency. However, we are seeing improvements. As my right hon. Friend the Secretary of State reported on 2 July, it is pleasing that the agency has succeeded both in making the majority of payments earlier than last year, thereby boosting farmers' cash flow, and in meeting its formal target of making 96.14 per cent. of payments by 30 June. I reiterate my thanks to RPA staff, who have worked long and hard to make that happen.

However, it is also clear that there needs to be further improvement in the RPA's performance before it can be said that it is again providing an acceptable level of service. The next step in achieving that will be to complete the work on the 20,000 cases from 2005, which have been referred to, where entitlement values have been identified for review and possible adjustment, upwards or downwards, to 2005 and 2006 payments. RPA resources are now being switched to that work. We look forward to seeing real progress on those cases in the coming months and we shall of course keep the House informed.

Photo of Michael Jack Michael Jack Conservative, Fylde

The Minister is aware that his Department is planning for level cash as its income in the next comprehensive spending review round. He is also aware that a further £55 million will have to be found over the next three financial years to carry out some of the improvements to which he has adverted. Could he therefore explain to the House where that money will come from within the DEFRA budget and what the policy and reality implications are of spending more on the RPA and, by definition, less elsewhere?

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

The right hon. Gentleman should wait for the outcome. He has levelled some detailed questions at me. I have many questions to answer, and I will do my best to do so this evening.

The RPA has already begun to process the 106,000 or so claims that have been submitted under the 2007 single payment system. The agency's targets for 2007-08 were set out in a statement by my hon. Friend Barry Gardiner on 26 June, and they include a target to pay 75 per cent. by value of valid 2007 SPS claims by 31 March 2008, and 90 per cent. by value of valid 2007 SPS claims by 31 May. That target represents a greater degree of challenge for the agency in the coming year, while reflecting the fact that it is still in a recovery period.

I understand those who have called for a commitment to make partial payments in December this year. That might look like a simple matter, but there are real issues around the legal basis for such payments, the division of resources entailed in making them and the potential disallowance risks involved. As my hon. Friend the Member for Brent, North said in his statement, this is an issue, and we will return to it in the autumn, alongside the progress that we are making in processing those claims. I look forward to having further exchanges on that matter.

I turn now to the "Vision for the Common Agricultural Policy" report. The evaluation of the CAP has taken major steps in the right direction since 2003. We believe that it still lacks a clear and justifiable long-term goal, however, and our "Vision" paper was designed to underpin a European farming industry that is profitable, competitive in its own right and more sustainable, and one that is rewarded for delivering genuine public good and benefits that give the developing world a chance, as my hon. Friend Kelvin Hopkins said.

Photo of Jonathan R Shaw Jonathan R Shaw Parliamentary Under-Secretary (and Minister for the South East), Department for Environment, Food and Rural Affairs

I do not have very long; I will not give way, if the hon. Gentleman does not mind.

To achieve such a farming industry, the report advocates a manageable period over 10 to 15 years. Important protections should be progressively aligned with the much lower level prevailing in the rest of the economy, in relation to export subsidies. Pillar one domestic support should be phased out, leaving the CAP as a framework for safeguarding a fair regulatory trading framework. Public spending should be based solely on pillar two-type public benefits such as the environmental schemes that hon. Members have mentioned.

I am pleased that the Committee's report supports those goals. There can be no doubt that our vision represents a radical transformation of the CAP. Such changes would free farming from the heavy market control, bureaucracy and regulation of the CAP so that it could make the most of the new opportunities provided by growing global demand. In that regard, there is a good story to tell.

There are now 28,000 environmental stewardship agreements in place, covering nearly 4 million hectares of the country. The new rural development programme for England provides £3.9 billion over a seven-year period—more than double the budget for the previous programme—and £3.3 billion of that will be devoted to the schemes that enhance and protect the environment. That includes transferring or modulating up to 14 per cent. of the budget from pillar one of the CAP to help to fund environmental land management schemes and providing more than £700 million of national co-financing to accompany those modulated funds.

Our vision involves moving the farming sector forward yet further in that direction. It also has the potential to bring real savings for consumers and taxpayers, and economic benefits for society. According to the Organisation for Economic Co-operation and Development, the CAP currently costs €1,000 a year for a family of four, and will leave the EU economy €100 billion poorer over the period from 2007 to 2013— [ Interruption. ]

That is what we have set out in our vision. More widely, it would have significant benefits for the developing countries. Agriculture is extremely important to developing countries, accounting for 60 per cent. of employment and 25 per cent. of gross domestic product—even more for some of the poorest countries. Agricultural protection of the sort needed to support the CAP seriously distorts world markets and effectively excludes exports from many developing countries. Net welfare benefits to the developing countries from CAP reform are estimated to range between $24 billion and $43 billion annually. The Government have promoted those objectives for several years, which is in line with our ambition for farming, the environment, trade and development.

Let me deal with some of the issues raised— [Interruption.] It is a fly; the environment is bad. [Interruption.] I have never been heckled by a fly before, but there we are. Mr. Jack said that we had sidestepped issues and that our "Vision" was not visionary. Well, we were the first Government anywhere in Europe to set out a future for the common agricultural policy—no Government had ever done it before—and it has succeeded in generating debate. Previously, we had been going from one step to the next, but we were the first Government to set out a programme of radical reform. It was designed not to be a road map but to stimulate debate—and that is exactly what it has done both here and in the rest of Europe. Criticism was made of the publication date. Yes, it was a risk—a calculated risk—in order to generate debate. Criticism was also made of the research, but we used OECD statistics and we were commended by the OECD for using its data.

During the debate on the Rural Payments Agency and the single payment scheme criticism was levelled at personalities—both Ministers and officials. In our response to the Select Committee, we will make it clear that we were disappointed that new territory was entered into by naming officials in that way. I understand the feelings and anger expressed on behalf of the rural community, but that was a departure from usual practice and the same rules should apply to this Government as to other Governments.

My hon. Friend the Member for North-West Leicestershire expressed concern about remapping and its impact on the 2008 scheme. It will not impact on that scheme. When we remap, we will involve all stakeholders to ensure that it is timely and that it does not cause further difficulties. We understand the concerns and we are anxious to ensure that this does not happen again.

Mr. Williams asked whether agriculture would survive. We think that farming has a bright future. Enormous change is happening across the world. America, for example, is developing bioethanol plants at a rate of one per week, which will have a significant impact on the amount of grain exported. Where we see the economies of China and India rising and developing, it will mean further opportunities for Britain.

In our "Vision" document we set out our plans to move Britain from subsidising production to providing subsidies for environmental good. We want farming to seize the opportunities that the global world offers and we want to ensure that developing countries are able to access the markets. That is our vision for the future.

Where I have been unable to respond to right hon. and hon. Members' points, I will write to them. I am thinking particularly of the hon. Member for South-East Cambridgeshire, who speaks for the official Opposition. I apologise for being unable to respond to all his points, but I will correspond with him.

We are clear about where we want to go in the future. If in five, 10 or 15 years' time a future Labour Government can look back on this Labour Government's achievements and say, "We set out that vision and it was realised"—meaning the vision of a European farming policy in line with what the Select Committee proposed—we will both be pleased.

It being Ten o'clock, Mr. Speaker proceeded to put forthwith the Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54( 1 ) and ( 4 ) ( Questions on voting on estimates, etc. ).