Public Accounts Committee

Oral evidence: Early review of DEFRA’s Common Agricultural Policy Delivery Programme, HC 642

Wednesday 9 December 2015

Ordered by the House of Commons to be published on 9 December 2015

Watch the meeting: http://www.parliamentlive.tv/Event/Index/e9550d32-2180-4a9b-99f8-e93257f75bce

Members present: Meg Hillier (Chair), Mr Richard Bacon, Chris Evans, Kevin Foster, David Mowat, Stephen Phillips, Mrs Anne-Marie Trevelyan

Sir Amyas Morse, Comptroller and Auditor General, Adrian Jenner, Director of Parliamentary Relations, National Audit Office, Simon Helps, Director, National Audit Office, and Marius Gallaher, Alternate Treasury Officer of Accounts, were in attendance.

Witnesses: Bronwyn Hill, former Permanent Secretary, Defra, Clare Moriarty, current Permanent Secretary, Defra, Mark Grimshaw, Chief Executive, Rural Payments Agency and SRO for the CAPD programme, and Liam Maxwell, Government Chief Technology Officer, Government Digital Service, Cabinet Office, gave evidence.

Q1 Chair: Good afternoon and welcome to this afternoon’s Public Accounts Committee. We are here today to examine and question witnesses on the National Audit Office’s Report on the early review of the common agricultural policy delivery programme—something that the Committee, and Mr Bacon personally, have looked at in great detail over many years.

              I have to say at the beginning that Defra has what one might call an inglorious history of failure when developing systems to support subsidy payments for farmers under the common agricultural policy, and the NAO Report shows that this has not been addressed. Payments to farmers have been delayed at a time when their cash flow is already stretched, and the Government more widely consistently struggle to deliver large and complex digital programmes well—an issue that we know the Government Digital Service is meant to be addressing.

              When reading the Report and preparing for today, my colleagues and I were really shocked to discover that financial penalties from the EU have already cost taxpayers £642 million in the 10 years to 2014—the figure is not even up to date—and are now expected to reach an astonishing £180 million a year. Depressingly, the Report also identifies personal rifts, dysfunction, counterproductive behaviours and senior staff unable to work together, which we find entirely unacceptable.

              The aim of this session is to get to the bottom of why this was allowed to happen and to ensure it does not happen again. Members of the Committee have been inundated with information from colleagues who represent large farming constituencies and who have had a lot of contact from the people who are supposed to be the beneficiaries of this scheme but have real concerns about how it is working for them on the ground. As well as ensuring value for money for the taxpayer and avoiding the waste that I just highlighted, we as a Committee need to ensure this scheme is working for the people who are supposed to be using it: the farmers. I will hand straight over to Anne-Marie Trevelyan, who is leading as rapporteur in this session.

              Q2 Mrs Trevelyan: I am a new Member of the House of Commons, and this National Audit Office Report has been a real eye-opener for me. I have many small farms across north Northumberland that absolutely rely on CAP and the programme working to support their cash flows and to help them to get through the unpredictable markets they work within. It is an absolutely vital part of their continued existence of producing food for us. I was genuinely shocked to discover that Defra has been completely unable to get to grips with getting this CAP delivery programme up and running; I find it deeply worrying.

              I shared with my farmers that I was doing this Committee today, and I have been inundated with their concerns that, year after year, there is constant pressure—the sense of expectation and disappointment; going to their bank manager and consistently having to be the ones who carry the brunt of the fact that Defra cannot get the systems to work and pay out when they should. My first question is: can you explain to us why the programme has gone so wrong?

              Clare Moriarty: I will start, and I invite colleagues to join in.

              I took up post as the permanent secretary of Defra in August, and what I found when I arrived was that people were absolutely focused on making the BPS payments on time and accurately, on putting the new countryside stewardship agreements in place and on continuing to improve the system for 2016 and 2017.

              On 1 December, the first day of the payment window, we paid over 33,000 farmers—38%. We are now up to 41%. While in the final years of the previous system we were able, as Mark Grimshaw can tell you, to make a much higher proportion of payments on the very first day of the payment window, this is not a story of great disaster in not paying people. It certainly is not a repeat of 2005.

              We have to and will recognise that this programme has had quite a lot of problems. There are places where we have achieved what we intended to achieve, and there are places where we have, at the moment, fallen short. We are finding that we are going to take longer to get to the level of service in the system that we originally anticipated we would have in 2015.

              There are lessons for Defra. There are lessons for the Government Digital Service. If I was pulling out a few particular lessons, one would be about being really realistic at the start of the process about how long things will take, about our costs and about the amount of contingency we should bring in. There is certainly a lesson across Government about the capacity and capability that we have for this type of project, and particularly for doing projects in a new and different way from how they have been done before. Thirdly, there is having a lot of clarity about contingency and about our ability to make change when we need to in order to prioritise the really important thing, which was making sure that farmers were paid. The decisions that were taken in March very much were taken in that spirit, and that is what has enabled us to meet that payment record.

              Q3 Mrs Trevelyan: Ms Hill, your views on why the roll-out of this programme has gone so wrong would be very helpful.

              Bronwyn Hill: Clare has given a lot of the highlights. I guess I was the permanent secretary and the accounting officer for most of this period, so I do accept we have not delivered our ambition of a fully digital service from day one; but what we have done is to try to mitigate some of the risks that that would not happen by having a really solid core rules engine and finance systems and other checks that Mark can talk about, to ensure that the payments that we are making—we are making full payments from 1 December—are accurate and mitigate the risk of the disallowance that we have inherited in the past.

              I should explain, for people who are relatively new to this subject—I know you have some experts on the Committee as well—that the IT systems are one source of disallowance, but there are other, wider sources that are not addressed by this programme. The NAO did a very helpful review of our wider strategy to address those wider disallowance risks over a period of time, which do require further investment. I understand that Defra has made some very strong business cases on that, and it will be for Clare and others to determine. This drives part of the disallowance, but by no means all of it.

              Q4 Chair: Mrs Trevelyan has asked you what went wrong, but which of you is responsible for the problems?

              Bronwyn Hill: Technically, the bit that didn’t work, if I can describe it as very high level—

              Q5 Chair: Which of you individually takes responsibility for what went wrong?

              Bronwyn Hill: I take the responsibility for what we achieved and for what we did not achieve—absolutely. The buck stops with me as the permanent secretary.

              Q6 Mrs Trevelyan: I appreciate your comments that farmers became the focus of the Department’s efforts in March. My farmers, while they were frustrated by the systems, were happy to see a bit of paper that they could fill in and send back; the process has worked from their point of view. However, the planned investment for the IT programme, which you are still trying to get right, was £155 million, and now the expectation is that it is going to be some £215 million—a 40% overstretch.

              I have been continually depressed as I sit here week after week that IT programmes seem to have an unending pot of money. It would be helpful to know if you think that is what it is actually going to cost, or can the taxpayer expect to see yet more money poured into getting an IT system right? Why on earth do you seem to be unable to get your act together to join up the payment system, the mapping systems and the various different bits that need to go together to make this work in a digital framework? Perhaps you could kick off, Mr Grimshaw.

              Mark Grimshaw: By all means. Just to assure the Committee, the elements that you just referenced are all now integrated and working together. That is why we were able to make the number of payments—33,736—on the very first day of the payment window. I see the evolution of that system over the course of the full life of the programme, which is 10 years, driving out the benefits which were stated in the original business case.

              Clare Moriarty: One point that is made in the Report and that we recognise is that the level of contingency within the original budgetary envelope was probably lower than it should have been, given the amount of risk in the programme. A series of point estimates were made and then an allowance was made for contingency. You would expect something to come along and use that contingency. The reason we put contingency in is that there will generally turn out in any programme—whether it is an infrastructure programme or an IT programme—to be some costs that you cannot foresee at the beginning but you know will come along. We recognise, with the benefit of hindsight, that 40% was too low. In any scenario we might have expected the costs to come out higher than the £154 million, but having said that, there are clearly issues about the particular way in which the programme proceeded that have meant that we have incurred some costs that we did not expect.

              Q7 Mrs Trevelyan: Can you identify those costs so future programmes might not get that wrong?

              Clare Moriarty: There is a breakdown. I will ask Bronwyn.

              Bronwyn Hill: I was there most of the time when there were pressures. I would say there were broadly three areas—that is not to say they were exclusive. One was around simply building the interactive portal for farmers to use; there were elements around something IT experts call “hosting and environments”; and there were elements, as the NAO Report sets out, of our not being able within the timescale to recruit as many civil servants as possible to do the work. Inevitably we had to bring in more interims than we had originally planned, so there were also increases in people costs, because you are buying from the market rather than growing your own. I think those are the three main, biggest cost drivers. They are obviously big lessons for us in terms of the things that tend to drive greater costs.

              Q8 Mrs Trevelyan: Did you not have the people in post because the Government Digital Service’s aggressive determination to make this happen quickly meant you could not prepare properly?

              Bronwyn Hill: That was not the reason. The reason was broadly civil service pay rates. We are competing in a very competitive IT market against the private sector, and indeed against other Government Departments. Although we did get some special allowances, it was not enough to bridge the gap. Secondly, there is the sheer volume of demand for IT skills, given the amount of transformational change in the Government and the private sector, so we are in a very hot market.

              Q9 Mr Bacon: On that point, I do not want to interrupt Anne-Marie Trevelyan’s flow but I was about to ask you whether you then went to the Treasury to ask for a special exemption, like the Ministry of Defence did. You said you did to some extent, but I remember some years ago, when the RPA problem was occurring in its earlier iteration, that the IT director was getting paid twice what the chief executive was getting—your predecessor, Mr Grimshaw, was on £113,000 a year; the IT director was on £225,000 a year. You went off to get an exemption; why did you not make a strong case to get the exemption that you needed, rather than an inadequate one?

              Bronwyn Hill: This is about large volumes of people rather than individual spot rates. One of the challenges is the speed at which you get those exemptions and allowances, but the overwhelming factor for me was simply that we were buying in a very, very hot IT market, and some people choose to stay outside the civil service because they can earn higher amounts there. Whatever we could have paid would not have plugged the gap in the time available.

              Q10 Chair: The NAO would like to come in, to clarify something.

              Simon Helps: That is not the articulation that was put to me through the study about the particular issues around systems integration, where there was a particular shortfall. Programme staff were quite clear that the specific issues there were around obtaining a small number of people with very high calibre skills who could not be obtained because of spot rate issues.

              Bronwyn Hill: I agree, that was an issue at one stage. We are talking about a programme that has been going for about three years now, so there were different issues at different stages.

              Mark Grimshaw: I want to add something to what Bronwyn Hill was saying about the additional costs and something Mr Bacon put in his book, “Conundrum”, which we have all read many times. As a service and as a requirement, this was an ongoing evolution. The requirements we started the programme with were added to on an almost weekly basis by the EU, so we had to have the ability to use some of the contingency for those additional requirements that we did not know we had when we began the programme. That continues to this very day where they are making so-called efficiency and simplification changes that we have to respond to, so we are continuing to spend in that area.

              Sir Amyas Morse: If that continues to this very day and is likely to continue, Mr Grimshaw, does that mean that the answer to Mrs Trevelyan’s question is that it is quite likely the costs will continue to escalate? That is logical, from what you said.

              Mark Grimshaw: I think the £215 million budget we have currently will be sufficient for us to cope with any additional changes, unless there is a wholesale change to the scheme, and we would not expect that this far in to a new scheme.

              Q11 Mrs Trevelyan: You talk about one of the areas that did not work being the interactive portal, which obviously is what the end user has had the pleasure of experiencing. Can you explain exactly what went wrong with that? I know the Government Digital Service were keen to bring in Verify and to make that system suitable, but it clearly did not work at all. Some clarification on why that has fallen over so badly would be very helpful.

              Liam Maxwell: My name is Liam Maxwell and I am the chief technology officer for the Government. I was appointed as the SRO with eight weeks to go on this programme, when we were at the stage of looking at the final stages just before registration, so I oversaw it from then until we took the decision to move to a more paper-based process and contingency.

              To answer your question clearly, I suppose the best way of describing it is that what happened when the system went wrong using the visual component of maps, which was using the Abaco system, was that the volume of people using the service caused it to fall over at that point within the store procedures within the Abaco software. That presented itself to farmers in a very frustrating way, because they found themselves clicking on a field and trying to change the size of the map of their field, but the thing that everyone does at that point is say, “I think I will start another window,” they click off and do that, and it caused this particular system in that particular function of the system—displaying land and change of land—so many difficulties that it fell over at that point.

              A reasonable question would be: how on earth was this happening? Abaco was used as the rules engine; it is used in a number of other countries and widely in Italy, and the Italians have many more farms than we do, but it is used within a particular function of a rules engine—in a WAN, or wide area network, not an office environment—and the programme had elected to use not only the rules engine within the function, but the mapping functionality as well to display to users. It was not up to the job to do that.

              Functionally it worked, so in my first few weeks we were making sure that we were getting the functionality working and what we call the API calls between the two services, to make sure they were working together. There was a lot of work on that, but when the time came to do the performance testing, which I grant you was very late in the day—it was one of the things we tried to get going as fast as we could when we came in at the end of September—it did not perform effectively under those conditions. We had a couple of goes at it over a couple of weekends, then one Sunday I decided that we could not give a 100% guarantee that we would be able to serve it to farmers. We needed more time. That was the point at which we said, “Let’s pause this and invoke a contingency mechanism,” which was to move to paper.

              Q12 Stephen Phillips: So it was a capacity problem, rather than a functionality problem.

              Liam Maxwell: Yes, the functionality when running at low volumes was fine—

              Q13 Stephen Phillips: I understand that, Mr Maxwell. So who is responsible for having not examined whether or not this programme or piece of software, whatever it is called, had the capacity to deal with the calls that would be made on it?

              Liam Maxwell: One of the things that the programme—we—would hold our hands up to is that the performance testing was not done early enough in this programme. I would have expected to have been—

              Q14 Stephen Phillips: Irrespective of performance testing, which is really designed to elicit information to confirm assumptions previously made by the programmer, someone must have thought at the outset, “Is there sufficient capacity within this system to deal with the number of people who will be online at any one time?” Who is responsible for that?

              Liam Maxwell: Ultimately, at that point under the Government’s mechanism when this was being done, which was 2013-14, that would have been the programme executive or the programme director who took the decision to buy that software.

              Bronwyn Hill: The decision on purchasing Abaco, which is the core rules engine, was taken by the programme, I think at programme executive level. However, I think it is important to say that it is that rules engine that is enabling us to make the payments to farmers now, so it was taken as a risk mitigation. The thing that we could not test, because it had not been done in those early days, was whether you could integrate that with an interactive front-end portal that would enable farmers to go online, click on their maps, make a change and update the map. I think what Mr Maxwell is saying is that, with the benefit of hindsight, we should have done that testing earlier, but until you have built all the components, you cannot test them in an integrated setting, and when the testing at scale showed that it was not working, Mr Maxwell made the call to say, “Stop. We haven’t got time to fix this problem given the hard deadline of 15 May.”

              Q15 Mrs Trevelyan: Just to clarify, Ms Hill, you say “the programme” decided to buy the software. I do not understand what that means; I thought people made decisions. When that early decision was made to buy and use Abaco, because you knew, as you said, that it had a good solid base if all else failed, who would have made that decision?

              Bronwyn Hill: The SRO at the time—

              Q16 Mr Bacon: Which of the four SROs was that?

              Bronwyn Hill: That would have been Ian Trenholm.

              Q17 Mrs Trevelyan: More widely, the Report gives me the clear feeling that the Department really focused on buying an IT system without necessarily thinking more widely—I think you have proved the point that that was the case—about the various different organisations and mapping systems involved. I am surprised that there was no target operating model and no clear plan that was prepared before that decision, to make sure that all these things were actually rolled out. Why would the decision have been taken to look into the IT bit, rather than the wider picture?

              Bronwyn Hill: There are two things there. Certainly, I take the point about the target operating model around the IT business process change being developed later in the programme than it should have been—January 2015—but there was a second and wider set of changes that we were planning that were not part of what we call the CAP delivery programme. They were done in a separate workstream, because at the time Defra was looking across its whole network bodies—we have 30—to say, “What changes do we need to make now and for the future to operate more efficiently and with a better service for our customers, whoever they are?”

              There was a programme called the EU payments programme, which came up with a series of decisions—which we did take—to say that we would move a lot more of the transactional payments process people from places like the Forestry Commission and Natural England into the Rural Payments Agency. We did take that decision, but it was not implemented because by the time we came to do it, we realised we had to put all our energy into making rural payments work, so we paused the implementation of that decision, I think, in the spring of 2015. We did, however, move roughly 100 staff who had been working in core Defra on the socioeconomic schemes that help rural businesses into the Rural Payments Agency as part of that wider business change. So, we did some, but not all, of it. We took the decision early on to focus the CAP delivery element on the IT business process changes that we needed.

              Q18 Mrs Trevelyan: Ms Moriarty, do you feel that it is under control and that you have a clearer blueprint of where you are going in an attempt to bring all these different organisations and data sources together into the miraculous digital by default world we are all going to live in, including, magically, the farmers who have no broadband? Do you feel that Defra actually has a handle on that now, as a Department, and that it is going to be a smoother journey as the programme progresses?

              Clare Moriarty: I do, because, obviously, a huge amount has been learned from the process that we have been through. Just stepping through this: for 2015, as my colleagues have said, a decision was made in March 2015 to prioritise paying the farmers, so we have run a system which uses that basic capability and rules engine, which is very important because it was chosen substantially because of its characteristics in relation to disallowance, but with a largely manual front-end process. For 2016, we will be building back in more of the online capability—online applications, online claims, online entitlement and land changes. We will then have a system which looks considerably more like what we expected there to be in the first place. For 2017, we will be able to make further changes, learning from where we get to in 2015 and 2016.

              All of that nests, though, within a broader picture: what is the target operating model not just for our CAP payments, but for the Department as a whole? We have in the last few weeks returned to the work on the EU payments strand, which Ms Hill referred to, and having now got to the stage where we are paying farmers for 2015, we are in the process of re-energising it and looking at how we can create more streamlined transactional processing.

              We are also looking more broadly across the whole Department. Like all Departments, we have a challenging spending review settlement, and our response to that is an organisational reform programme—a transformational programme. We are just in the process of thinking about the overall target operating model, so that we can move forward in a way which is coherent, looking across the Department’s responsibilities. The common agricultural policy is a good example of something that already spans some of our largest delivery bodies. The Rural Payments Agency, Natural England and the Forestry Commission all have to come together with the creation of policy in the core Department, which, in turn, has to reflect the creation of policy in the EU. So we absolutely need to knit all of that together. It is a big challenge, but it is front end foremost of the agenda I have with my executive team in support of Ministers.

              Q19 Chair: We recognise the challenges for the future, but inevitably, given the nature of the Committee, we are focusing on what has happened and what has gone wrong. Mr Grimshaw, there has been a lot of discussion about the management of this. Could you amplify what has happened there?

              Mark Grimshaw: Absolutely. To pick up on Anne-Marie Trevelyan’s point about digital by default, we have evolved that so that is now digital by design, practical by implementation. Those farmers that need to apply with paper, because they do not have broadband or access to the system, will be able to do so. You will be aware of the significant lengths that we went to in order to facilitate applications for 2015. I am very sure that my colleagues from the NAO would agree that the focus of the last six months on making sure that the key controls for this system are in place, auditable and accurate will go an awfully long way to reducing the £180 million disallowance threat that we would have faced if we did not have the key controls in place that the Commission requires us to have.

              Q20 Chair: I am sure that when Mr Bacon comes in, he will talk about some of the paper-based aspects. Mr Maxwell, you highlighted at the beginning of your comments that you came in as SRO eight weeks before live launch. That is a very odd time to make such a senior change. Did it make sense at the time?

              Liam Maxwell: It was a challenging opportunity.

              Q21 Chair: Wasn’t it a decision by the Cabinet Office, ultimately?

              Liam Maxwell: It was a decision jointly by the Cabinet Office and Defra to appoint an SRO. It had been highlighted that issues with the software were becoming apparent.

              Q22 Chair: They had only just become apparent eight weeks beforehand?

              Liam Maxwell: I think they started to become apparent over the summer. I saw some notes in August and I started to get involved in this really in about the month of September, and on 16 September or thereabouts I was asked to go in to help resolve the situation.

              Chair: I am sure Richard Bacon will pick this up. Sorry, I am just aware of the time—I know Anne-Marie Trevelyan has more things to get through.

              Q23 Mrs Trevelyan: A couple. As much for clarity for those watching as for me as someone new, we have always heard about the historical penalties, and there have been £642 million worth of fines over the last 10 years, which is an extraordinary amount of money. At the end of the day, though, it does not affect Defra, because the Treasury picks up the bill. In terms of motivation for Defra to get it right, improve the system and be ahead of the EU, how does that work?

              Chair: I am going to bring Bronwyn Hill in, because her face is telling me she has something to say. As a former permanent secretary, perhaps she can answer that.

              Bronwyn Hill: I was acutely conscious from the minute I took up office in Defra, as I am sure Clare is—Clare Moriarty is the current permanent secretary—of the absolute need to tackle disallowance, and that has continued throughout. The question is what can we do and in what order we should tackle the legacy problems from what happened in 2005-06—because even in 2011, we still had a big hill to climb to overcome the legacy problems. Mr Grimshaw had been appointed as the agency’s chief executive shortly before I joined, so January 2011, and we developed a future options programme, which was meant to address and stabilise what we already had and get us into a fit shape to address the challenges of the CAP reform. I think that that was well done and we, as far as possible, lifted the qualification of our accounts, which is the sign.

              Then, given that we had another major CAP reform, which was—unbelievably—more complex than the previous reform, despite our efforts to simplify it, we knew we had a big hurdle. It wasn’t just the IT systems; we had wider risks from cross-compliance and difference of interpretation. That was absolutely a driving force behind the CAP reform delivery programme that we designed. The only question, which is a difficult one, is: what sort of disallowance can we reduce that number to?

              We try to think of it in terms of percentages. Recently, we have got it down, broadly, on average, to 2% a year of the scheme funds. That gives you a ballpark figure—it is 2% of the value, on average. It goes up and down depending on when the Commission conducts its audits and our negotiations with it about the penalties, but that is the simple version. We knew that there was a high risk that it would go up again simply because of the changes that we were introducing; the question was by how much? People were saying that I should set the target at 5% or 10%, but I, as the accounting officer—I gave a lots of thought to this—was very reluctant to set anything higher than 2%, because the Comptroller and Auditor General takes the view that that is irregular. A plan to spend irregular money does not sit well. We continue to assess those risks.

              Having had the adapted plan in March, we would say that there is a risk of higher disallowance related to the systems and the audit. It is still slightly higher in the first few years than we had predicted, but the longer-term challenge requires this wider investment to put even further investment into mapping capability, inspections or whatever.

              Q24 Mr Bacon: On this point, would you clarify something? The annual payment under the scheme is £1.8 billion and the Report says that the disallowance is £642 million, but that is over a number of years. Am I right that the farmers still get the £1.8 billion each year, but the EU does not pay that amount and the Treasury has to make up the difference?

              Bronwyn Hill: Yes.

              Q25 Mr Bacon: Do they then always come to you and say, “Well, we’re lopping that off the rest of your budget”?

              Bronwyn Hill: The way it worked for spending review 2010 was that we had ring-fenced amount that was flexible across years, but, absolutely, the Treasury expected us to do everything we could to reduce the risk. The reason for that is that it is quite difficult to predict accurately the finding of the Commission audits and how much we can mitigate or negotiate with them to get those down on a proportionate view. Then, even further, when they decide to deduct from our income, they deduct at source: they do not send us a bill; they just take the money away from the payments—the £1.8 billion. All those things make it quite difficult to forecast accurately exactly how much it is annually.

              Q26 Chair: Okay, but the point that Anne-Marie Trevelyan made was that it is the general taxpayer that bails out, and Defra does not take the direct hit.

              Bronwyn Hill: The Commission reduces the level of money that it sends to us in euros. We then make that up from Exchequer funds.

              Q27 Chair: But it is from Exchequer funds. That was Anne-Marie Trevelyan’s point.

              Bronwyn Hill: We don’t penalise the farmers.

              Q28 Mrs Trevelyan: There is no direct impact. The farmer is not affected, so you so you won’t have tractors parked outside Defra’s offices and farmers saying, “Where’s our money?”

              Chair: There’s an idea.

              Mrs Trevelyan: The British don’t tend to do that. The French model hasn’t crossed the Channel yet.

              Mr Bacon: Because they still get the money. But Mr and Mrs Taxpayer end up paying the difference.

              Bronwyn Hill: I am trying to assure the Committee that I take this risk very seriously. It is a very big risk for Defra, however the Treasury chooses to arrange the payments.

              Q29 Mr Bacon: A few years ago, they were penalising you, weren’t they? I remember that if you were trying to get a river dredged a few years ago, you couldn’t. Every letter from Defra started, “Due to our cock-up on the RPA, we haven’t got any money,” because the Treasury made you pay for it out of your in-house budget. Do you think that if they did that again, it would encourage you more?

              Chair: Perhaps that is for Clare Moriarty?

              Clare Moriarty: For spending review 2015, it is our responsibility to ensure that we manage the disallowance costs down. We will certainly bear a direct impact on other parts of Defra’s budget if we do not manage to do so. As Ms Hill said, it has always been a big preoccupation for the Department and it flows through in things such as the choice of Abaco as the rules engine—because of the record that has been established around disallowance. Abaco has lots of places where there are lots of check and balances that stop inaccurate payments being made—inaccuracy is one of the sources. It also brings together the payments under pillar 1—the basic payment scheme to farmers—and payments under pillar 2.

              Chair: Just for clarification for those who might not be aware, pillar 2 is the environmental scheme.

              Clare Moriarty: It is the environmental scheme. We are required to ensure that farmers are complying with all the checks in both areas. A single system that administers both pillar 1 and pillar 2 and has the cross-checks built into it before the money that gets paid out helps to lower our disallowance risk.

              We have developed a disallowance strategy because this is one of our top priorities and a critical element of making sure that we can deliver outcomes within our spending review 2015 settlement. The Report the NAO did in the summer was based on an early version of the strategy. Because there is lots of analysis about which precise areas of spend have given rise to disallowance in the past, we know that mapping is a significant area and we have secured investment through the spending review process to be able to improve our mapping systems. We expect that to have a direct feed-through into disallowance.

              We are also looking at issues around cross-compliance checks, some of the issues that have arisen on the environmental schemes and what we can learn from other countries, because some other countries have succeeded in driving down their disallowance rates per pound to much lower levels than where we are at the moment. So this is a big focus and a big priority.

              Q30 Mrs Trevelyan: That is helpful. From the farmer’s perspective, when that works, that will be truly revolutionary. I had a letter in my postbag yesterday morning about a corner of a field that is apparently now a wood, and the letter says, “We can’t do anything. Everything is on hold, and until that has been sorted out you will get nothing—not 90% or anything else.” That is a constant issue. Mr Grimshaw, are you confident that you can get these mapping systems joined up, working together, and the EA, Natural England and the Forestry Commission actually agreeing that a mapping system is the one they can go with, and that they will not say, “When I was there, that hedge gap was 3 metres, not 2.8 metres,” and bring the system grinding to a halt again and again? Are you comfortable that the new system will work for farmers?

              Mark Grimshaw: I am very comfortable. The reason why a number of your constituents are getting the letter that you referenced is because the processes are working right now. So we have one land parcel identification system, LPIS, which sits in the central Abaco system, which is approved by the EU Commission as being disallowance-neutral, along with the rest of the SITI Agri functionality, which is the product we purchased from Abaco. All future—not legacy—pillar 2 agri-environment scheme applications will use exactly the same mapping database that we use for the BPS. The reason that some of our customers—your constituents—are getting the letter is that the system is doing exactly what we programmed it to do and pulling out issues where what we have got in terms of our control data does not match with what the customer has claimed.

              Q31 Chair: Right. But they are not getting any money while those little issues are being resolved.

              Mark Grimshaw: That is right. As you will be aware the payment window runs from 1 December to midnight on 30 June and over the course of the last few years we have created a tiny rod for our own back by paying 95% of claimants on day one.

              Chair: Not this year.

              Q32 Stephen Phillips: The French manage to pay over 90% on day one every year.

              Chair: Just to be clear, it was 35%, was it not, on 1 December this year?

              Mark Grimshaw: For this year it was actually just over 38% on day one.

              Chair: 38%—forgive me.

              Q33 Mr Bacon: Can I ask you to look at page 11, recommendation C, which talks about leadership. It says, “The Department should maintain a strong and consistent leadership for the Programme.” It goes on to say, talking about the frequent changes of leadership, “To deliver the longer-term benefits and ensure everyone across the Programme is working towards the same goals, the Department must develop a clear vision that withstands any future change of SRO.” Can you talk about what this clear vision is?

              Clare Moriarty: This builds on what I was saying to Anne-Marie Trevelyan earlier. What we are currently engaged in is thinking about what the future shape of the whole of Defra—the core Department and our many delivery bodies—should be to fulfil our outcomes and meet the strategic objectives the Secretary of State has set out. We need to transform the way we do business in lots of different ways. We want to become much more data-led. We are becoming leaner. We are joining up our back offices. We are looking at how we have a strong and consistent policy and evidence section.

              Q34 Mr Bacon: The point about that sentence is that it says: “a clear vision that withstands any future change of SRO.” I know you are changing your SROs more frequently than some people change their shirt, and you have battle scars from the InterCity West Coast franchising competition, when there were no SROs and then they kept on changing. What puzzles me is this: you talked about becoming leaner and so on; are you saying that there were people who wanted to become less lean? What kind of vision would be threatened by the change of an SRO?

              Clare Moriarty: To be fair, those words were written by the National Audit Office and not by me.

              Q35 Mr Bacon: No, but you agreed to this Report.

              Clare Moriarty: We agreed to this Report. If you look at the history of the programme, where there were a number of changes of SRO, they were accompanied by some changes of direction and a certain amount of repositioning each time. Although the objectives of the programme were clearly set out, I am not sure they translated into something where when an SRO changed, a new SRO picked that up and naturally said, “I’m absolutely clear where we’re going with this and I will continue with it.”

              Q36 Mr Bacon: That is what I cannot understand, because this is relatively straightforward. Do you know what happened on 21 July 1969? Man landed on the moon for the first time—46 years ago. You are not talking about understanding the outer reaches of the universe. You are not even talking about landing a man on the moon. You are talking about payments to a finite group of people; you want the payments to be accurate and timely, you do not want to have disallowance payments and you want the programme costs under control so that you can show value for money. Is all of that correct?

              Clare Moriarty: Yes.

              Q37 Mr Bacon: Most viewers—most taxpayers—cannot understand why what I just described, which is a reasonable description of what you are trying to achieve, cannot continue to be focused on when there is a change of manager. The basic task remains the same, so why would it be that when a new person came in, they had trouble, in your words, picking up the objectives? The objectives remained the same, and they are really quite obvious.

              Clare Moriarty: The recommendation is setting out something with which I could not fail to agree about how we should make sure we run this programme as we move forward. We should have a clear vision that withstands any future change of SRO. We both agree that that should not be too difficult. There were in fact, as I say, clear objectives about reducing cost, keeping disallowance down, improving customer experience, flexibility and environmental outcomes. That vision was in place.

              In terms of what happened in reality as the programme went through changes of SRO, that is precisely the subject of this Report, and there are reasonable questions to be asked about that. In terms of moving forward, I think we all agree that we need to make sure the programme can withstand future changes of SRO, and one of the ways in which we will do that is by making sure that that clear focus on what the benefits are and what we are trying to get out is part of that.

              Q38 Mr Bacon: But all of that is motherhood and apple pie. What are we going to do? How are we going to do it? Who is going to be involved? How much is it going to cost? How will we manage it? How will we keep it on track? What are the milestones? That is all pretty vanilla stuff; it is not getting a man to the moon. You were having these problems not one or two years ago but 10, 12 years ago, and you are still having them. I don’t understand why it is so difficult. Is it because the policy itself is so hideously difficult that it cannot be implemented, because of the degree of complexity?

              Clare Moriarty: What I am trying to do is to separate the past from the future. The recommendation relates to the future. I think we all agree that this should not be rocket science, and it is a recommendation we can all sign up to and try to make happen. You ask a perfectly reasonable question about why it has not happened in the past, and why it has not happened in the past is the subject of this Report. There are probably other people better placed than me to answer the detailed questions about what happened in the past.

              Q39 Mr Bacon: The Comptroller and Auditor General wanted to say something.

              Sir Amyas Morse: I just wanted to ask you to put it in plain words. As I listened to the account of the future system development, it sounded to me like you would arrive at something that could be broadly described as a digital solution in about three years. It sounded to me like the original attempt was to arrive at a digital solution in one jump. That sounds like two rather different versions of what was feasible. Did they clash and is that why we had so much difficulty?

              Bronwyn Hill: From my perspective—there are different perspectives on what was possible, because we had not done it before and there was a lot of innovation—I would say it was possibly too ambitious, with the benefit of hindsight. The tension within the programme was below the level of the vision of paying farmers, doing it digitally or whatever. We were still going through the complex rules with Ministers, in terms of which policy decisions affect hedges, cropping and so on, in 2014, when we were building the system. That for me was the difficult thing—the decision taking just underneath the vision of, “We all want to pay the farmers. We all want to reduce disallowance risk.” The NAO was right to say, which is why we have agreed the Report, “If you have complexity, exactly how do we deliver those things when there are tensions and trade-offs between policy, delivery cost and time?” Having changes in your SRO in that period doesn’t help. I think that is what I am agreeing to.

              Chair: We need to hear from Mr Grimshaw and Mr Maxwell, and I’m sure Richard Bacon will come back in on this.

              Mark Grimshaw: To pick up on the point that the Comptroller and Auditor General made, no, it is not three years away. We will have a digital-by-design capability for customers in quarter 1 of 2016-17. As Clare Moriarty has already said, we will have online applications, online entitlement transfers and online land transfers. They are three of the four key controls that we have to have in place to bear down on disallowance, so making sure that those key controls were delivered was absolutely essential. Creating an online interface for customers does not even become an ancillary control and was not that essential, so just by switching around from March of this year onwards, we have been able to get back to where we ought to have been probably six months ago. That has put us in a much stronger position to deliver for our customers and for taxpayers an efficient service into the future.

              Liam Maxwell: In terms of the perspective of someone coming into this fairly late in the day, the question I would ask would be this. There was quite a considerable period of time when things were being developed. When I and the team I brought in arrived, there wasn’t an end-to-end process in place. I think the lesson we should learn—

              Chair: Sorry. It’s not your fault, but the acoustics here are terrible and the air conditioning is on. Could you speak up a little? The fact that there are four of you doesn’t help.

              Liam Maxwell: The perspective of coming in that stage and finding that there was not an end-to-end service in place did lead me and the team to question—obviously, some things had been going on and things had been trying to develop in the time period. I think what happened with the programme genuinely was that it ran out of time, coming up against a very hard deadline. We have encountered that with different programmes. You can look at, for example, the electoral registration programme. That was a very hard deadline. It involved many, many more people—46 million people and 400 councils. It was much more complex. But that worked because very early on a full walk-through was possible and very early on user research and user design had been taken on board and done much more quickly at that stage. That was not what we found in September 2014.

              Q40 Mr Bacon: Remind us why a full walk-through was not possible in this case.

              Liam Maxwell: The way the teams had been working meant that they had three main silos of work, which used three main pieces of software, which then arrived and said, “Please stick us all together.” Not all the performance testing and not all the functional testing on one of those was in place at that point.

              Q41 Mr Bacon: You say, “The way the teams had been working meant that they”, which makes it sound as if you are a rather disinterested observer. In fact, as paragraph 2.5 says, this was a “‘digital exemplar’ under the Cabinet Office Transformation Programme.” You started in your present job in December 2012, which makes you a quite long-standing official, by the standards of these things. You have been in post for almost three years. This was your poster child. Have you suggested to other Departments that they should follow the pattern and model set by this programme, because it’s your exemplar?

              Liam Maxwell: No, we haven’t. One of the reasons for having a set of exemplar programmes was to try to work with Departments to achieve business transformation using digital technology. For example, the work on lasting power of attorney in the Ministry of Justice and the carers’ allowance in the Department for Work and Pensions achieved a simplification. The move to digital with the Department ensured that the user’s journey through that process was simpler, and also that the administrative function for the particular component—

              Q42 Mr Bacon: They were exemplars that worked, so you could point to them and say, “That is an exemplar that worked.” This is an exemplar of how not to do it, isn’t it?

              Liam Maxwell: Yes. Well, those are not the words I would use. In the exemplar programme, there were 25 exemplars, 20 of which landed within a two-year period. I don’t think there has been another programme across government that has done something and got that level of result so quickly. There were five that did not quite make it in time; this is one of them.

              Q43 Mr Bacon: Yes, but it is more than that. There was a fundamental failure of leadership. There were four senior responsible owners in a very short period. Mr Helps, was it four SROs in one year?

              Simon Helps: Yes.

              Q44 Mr Bacon: Ms Moriarty, you know about SROs. Who is responsible for the fact that the SRO changed four times in one year?

              Clare Moriarty: Well, I will start to answer, but I think Ms Hill will come in as well. One person left the civil service to take up a job elsewhere.

              Q45 Mr Bacon: Who was that? We have a chart here. Do you mean Ian Trenholm? He left to take a job outside the civil service.

              Clare Moriarty: Yes.

              Mr Bacon: And then Norma Wood was appointed SRO.

              Chair: We had her in front of us before.

              Bronwyn Hill: Shall I do the history? That might help.

              Mr Bacon: Yes, sure.

              Bronwyn Hill: Ian Trenholm took up a job outside the civil service, so I couldn’t stop him from going. I acted quickly to get an interim with very good experience of doing major projects and business change—Dr Norma Wood.

              Q46 Chair: She left quite suddenly.

              Bronwyn Hill: No, she didn’t leave. Over the summer, as Mr Maxwell pointed out, we experienced some problems, including with the issue of whether we were going to use Verify or not. That led to us look at how we could get better support and systems and join up with GDS, at which stage it was proposed that Mr Maxwell should become the SRO. As he said, it was a tough ask. At that stage, I was very keen to secure continuity, so Dr Wood continued as deputy SRO and did a lot of very good work on different elements of the programme. We had the same programme director from the start, who is still working for Mark Grimshaw.

              Finally, just to round it out, since I was the person who was there at the time, I had conversations with Mr Grimshaw, Dr Wood and Mr Maxwell about when the right transition moment was for us to move from an SRO of the programme and hand it over to the RPA chief executive as a business. That changed in the light of events and circumstances, but our plan was always to hand it over eventually to the CEO.

              Q47 Mr Bacon: Obviously, once the project is up and running and delivered, you would expect to do that.

              Bronwyn Hill: But we did that earlier, because at the time we decided to go for the adapted plan. Mr Grimshaw was the best placed person to marshal all the resources needed to do the part-on-paper workaround.

              Liam Maxwell: When I was appointed, the agreement was to be appointed until 15 May 2015. That was the agreement to come in.

              Q48 Chair: Through the general election. Was that a key date?

              Bronwyn Hill: The 15th was the EU deadline.

              Chair: Sorry, we are politicians.

              Bronwyn Hill: We noticed it as well.

              Liam Maxwell: Although, according to the books, I remained the SRO until 15 May 2015, essentially when we took the decision on 16 March to go to paper, I very clearly made sure that I handed over and got out of Mark’s way in delivering the service.

              Q49 Chair: It seems to us that it is now a paper-assisted digital project, which is perhaps an admission of the failure of the digital. Mr Grimshaw was in the best place to understand how it actually works for farmers and within Defra,  and you, Mr Maxwell, were the IT guru coming in to sort out the IT side, but the two cultures—how it actually worked in the Department for farmers and the IT demands—clashed. Is that a fair summary?

              Mark Grimshaw: No, I do not think it is a fair summary of the issues. I agree that I am the best person to take this forward, and we have evidenced that from March onwards. One difficulty was the original direction set by Mr Trenholm in the push for the digital front end. To be fair to Mr Maxwell, when he came in, given his background and experience, it would have been incredibly difficult for him to take it in a different direction. He did what he was brought in to do, which was to look at the issues related to the IT. He cleared some of the blockers out of the way. When it became clear that it needed to be dealt with on a more local basis, he rightly stepped out and left it to the agency.

              Chair: You put it very nicely but, though I can’t find it in the Report just now, it talks about rifts.

              Q50 Mr Bacon: The fact is that there was a fundamental breakdown between the people running this programme who had different views on it. Mr Grimshaw, you said that the online portal was not a priority. You said, to be fair to Mr Maxwell, it would have been very difficult for him to change what Mr Trenholm had been doing.

              Actually, if you look at page 26 figure 5, Mr Trenholm’s priorities and focus were “championing digital agenda, understanding system capability pre-transformation”. On Mr Maxwell’s priorities, it says to the right of figure 5 under focus, “user needs and improving front end service delivery”. There is a plain difference between improving front-end service delivery—Mr Maxwell’s priority—and what you said, that the online portal was not a priority. There was a fundamental disagreement about what was most important, wasn’t there?

              Mark Grimshaw: There is very much a difference in approach. As I said earlier, NAO colleagues would support the fact that there is not a requirement for an interactive front end from the Commission. It carries no disallowance benefit or burden. What is absolutely key is to ensure that we have the key controls in place for the core system.

              Q51 Mr Bacon: Could you just unpack that for a second? When you say there is no insistence by the European Commission on having an online portal, do you mean the Commission would be content were you to do it in a paper-based way?

              Mark Grimshaw: The Commission are content for us to take applications on paper because that is what we did last year.

              Q52 Mr Bacon: Did you have to get an exemption for that? All the talk years ago was of a requirement imposed by the EU that meant you were going to have to do this digitally and there would be no choice about it. Hence, all the digital mapping and everything else. That’s wrong, is it?

              Mark Grimshaw: There is no requirement from the EU for us to capture information digitally. Clearly, there is an efficiency benefit if we are able to—

              Q53 Mr Bacon: Apparently not. We fought the second world war with index cards, Mr Grimshaw, and we won it without the modern computers that people have now. It is not obvious that the efficiency gains have been made, is it?

              Mark Grimshaw: That is why we went back to a hybrid paper-based solution for applications.

              Q54 Mr Bacon: Back to my question. Could you answer my question?

              Mark Grimshaw: I thought I had.

              Q55 Mr Bacon: There was a fundamental difference of approach, wasn’t there?

              Mark Grimshaw: Between?

              Q56 Mr Bacon: Between your view, when you said that the online portal was not a priority, and the view of Mr Maxwell, who thought that improving the front-end service delivery, creating digital by default, was the priority. I will bring Mr Maxwell in in a second. Mr Grimshaw, you may well have answered the question, but could you amplify it so that I am clear where you are coming from?

              Mark Grimshaw: There was a difference of focus. My focus, as head of the paying agency for the UK, has always been on reducing disallowance and providing accurate payments to our customers. That is facilitated by having the key controls in place at the core of the system. There is no requirement to have a digital front end. Clearly it adds value if you have one.

              Q57 Mr Bacon: Your view—and I caricature it, obviously—would be, “Here are all these folk coming from outside banging on about digital by default,” which was all very fancy and very well but could easily divert you from your central task of making accurate payments. Is that an accurate caricature?

              Mark Grimshaw: It is certainly a caricature. There were clear differences in approach. I go back to the requirement to have the key controls in place that protect this country from significant disallowance.

              Q58 Mr Bacon: Are you saying that the potential focus on digital by default could distract from that important emphasis on the controls?

              Mark Grimshaw: There is that possibility.

              Q59 Mr Bacon: Thank you. Mr Maxwell?

              Liam Maxwell: I was going to try to help on your specific point about the line of the report. That part of the report was a collection of what people had told the officer about what was going on.

              Q60 Chair: From the National Audit Office?

              Liam Maxwell: Yes, from the NAO. Ian Trenholm did not stand up and say that, as I understand it. I certainly didn’t stand up and say those things; they are reported as being the things that people said about us.

              Q61 Mr Bacon: Do you mean that figure 5 is wrong?

              Liam Maxwell: I am not saying it is wrong. I am saying that when Mark’s approach and my approach, or somebody’s approach, is looked into, it is not Mark who said that he had this; what is in the report is actually what was said about us.

              Mr Bacon: I don’t understand any of that.

              Chair: We need to bring in the NAO to clarify.

              Simon Helps: I think these were primarily driven by the individuals involved in the interviews that we had with them. In addition, the references were cleared specifically with each of the individuals or, for those of you who are still in government, with the Departments, so they have been cleared as factually accurate, including significant feedback from yourself, Mr Maxwell.

              Q62 Chair: Mr Maxwell, are you saying that you disagree with this Report?

              Liam Maxwell: No, I am not saying that I disagree with the Report. I was just trying to explain that the characterisation that you were offering Mr Grimshaw—

              Q63 Mr Bacon: There is plainly a difference. I was simply trying to paint it in bright colours so that it is easy to understand. You are Mr Fancy Pants coming in from the outside with your digital dreams.

              Chair: Page 28, paragraph 3.10, talks about “deep and persistent personal rifts at senior levels and at times these led to counter-productive behaviour by the Programme’s leaders.” That is where Mr Bacon is heading. Mr Maxwell, do you have any comments on what Mr Bacon is saying?

              Liam Maxwell: One of the roles of the Cabinet Office is to challenge and support, and to be appointed. Coming into the programme at the stage we did, it was obviously a time when we were coming in to try to change what was in place quite clearly and quite directly. There was a level of different approaches to asking some of the questions that were being placed, but I would say that the focus that Mr Grimshaw and I formed very early on was the core premise of what we were trying to do, which was to make sure that the farmers got paid. The core premise was to make sure that there wasn’t just a front end but a front and back end that worked, and to make sure that we would have something in place that would be robust and could work together.

              As we went through the PAR and PBR, which happened over the next three months, we saw the situation stabilise; it was not perfect, but it became a more stable situation. In fact, it was the failure of the mapping functionality that was the focus of what we have been talking about today; the rest of the back end of the programme, although it is the first year of the scheme, was not in such a red state at that time. Part of that was because, although we come from different parts of the civil service—although I wouldn’t call myself Mr Fancy Pants, I am somebody who had come in to support and help—and sometimes when someone comes in from the centre in that way, people feel that it is difficult, we were welcomed in and we made a material difference to what was going on.

              Chair: I am going to bring in the Comptroller and Auditor General, and then we will be moving on to our quick-fire round.

              Sir Amyas Morse: I just want to say, particularly to Mr Maxwell and Mr Grimshaw, that we very rarely write reports that relate to personal behaviour like this. It is a most unusual event to have had such extensive comment on behaviours that were distressing to staff and visibly confrontational. Just skirting around it with a bit of chat is not going to be good enough. You need to speak to this issue. It is not good enough just to explain it by saying, “We co-operated well.” You need to answer the question. If you got on this badly—this is an agreed Report—you need to explain what was going on slightly more frankly. Please, Mr Maxwell, what was happening?

              Q64 Chair: Mr Maxwell and Mr Grimshaw, we need to get to the bottom of this, as I highlighted at the beginning.

              Liam Maxwell: To be frank, one way of describing this would be to describe the geography of what was involved. The programme was on one floor of the Department, and the Rural Payments Agency was on the rest of the floors of the building, and they were culturally very different. People dressed differently; people used different methods of reporting. Instead of using much more traditional ways of reporting management information, the programme itself used modern digital techniques to help to report what was going on, and I think people found that very difficult, as a different way of managing a project. We encountered that in all the 25 exemplars we did across Government, and it was something that different Departments took in different ways, and different Departments reacted in different ways to it. 

              I don’t want to sound as if I’m being glib by saying that I’m from the centre and when someone from the centre turns up it is difficult. However, when someone turns up with that little time to go, on a programme that didn’t have a walk-through product, there were very clear conversations about what we needed to do to fix it.

              Q65 Chair: I will bring in colleagues on this in a moment. However, Mr Grimshaw, I think we would like to hear your views on this. Then I will bring in Stephen Phillips, David Mowat and Chris Evans for a quick-fire session.

              Mark Grimshaw: One of the things that I regret about the development of the programme over time was my personal inability to explain the requirements of the programme in terms of the key controls versus any of the ancillary activity. That is a frustration that I still bear, and I am fairly sure that that would have led to some quite interesting and robust exchanges of comments between Liam and I, and other senior people in the programme. However, Liam is absolutely right that at no time was there a focus on anything other than delivering a successful outcome for customers, users and the taxpayer.

              Q66 Chair: I think, Miss Hill, we just have to ask what you were doing while this—frankly—childish spat was going on between different cultures and different individuals? You were the permanent secretary at the time.

              Bronwyn Hill: We held regular meetings—weekly meetings—to go through the issues, to get to the bottom of what was driving it, and I would say that I encouraged people to take a more collaborative approach to their leadership roles. I didn’t want to stifle the tension, because we had to get these issues out on the table as to what was the right balance between digital/innovative versus the right controls for the EU audits, and that is a massive tension in this programme. It is a big challenge and I do not want to underestimate that, but I was disappointed that the enormous amount of time, commitment and energy put into the programme by everyone I knew on it was not always reflected in behaviours at senior leader level.

              That’s just my perspective; I understand that there are other perspectives.

              Q67 Mr Bacon: Could you say that sentence again, because you swallowed it?

              Bronwyn Hill: I want us to give a lot of credit to the people who worked on this programme, through all the ups and downs and all the challenges, for delivering what they did deliver. I hope I was clear that I expect better collaborative leadership across difficult issues and difficult boundaries; I do not want everyone agreeing with each other all the time. And to some extent, the fact that that collaborative leadership didn’t happen all the time, I might take some of the rap for that. However, as you can hear, there are quite different cultures: I wanted to try to get the best of both cultures.

              Chair: Okay, but I think that if more junior people had been involved, maybe heads would have rolled at this point. It is amazing that it carried on.

              Stephen Phillips will pick up on this.

              Q68 Stephen Phillips: That is a very good point, isn’t it? Could you look at paragraph 3.11 of the Report, Mr Grimshaw and Mr Maxwell? As the Comptroller and Auditor General has pointed out, this is a Report from the National Audit Office. This is about as strong as the NAO gets in terms of personal criticism. The Report says, “The dysfunction and inappropriate behaviour at the top”—that is you two—“was very apparent to Programme staff at this time, and created a frustrating working environment…preventing the culture of trust”. And the preceding sentence says, “Rifts between senior Programme officials went beyond the creative tension”—that is you two again—“that is to be expected”. But, and here is the point, it “impacted on implementation and delivery”. In other words, it cost the taxpayer tens of millions, and possibly hundreds of millions, of pounds, as we now learn.

              I want to give both of you the opportunity to defend your dysfunctionality and your “inappropriate behaviour”, and then I want to hear from Ms Moriarty what has been done about it and why both of you are still in post? Dysfunctional and “inappropriate”, Mr Maxwell?

              Liam Maxwell: The approach that we took was very task-focused. Had we our time again, we could have gone in and tried to help earlier, and in a more collegiate way, which was what we had tried to do before. But when we arrived at the programme, I have to restate we arrived with eight weeks to go—

              Q69 Stephen Phillips: I do not want to interrupt you, but you are answering a question that I have not asked. I want you to defend—this is an agreed Report factually—your dysfunctional and inappropriate behaviour.

              Liam Maxwell: In the circumstances, we tried to deliver a service from something that was—

              Q70 Chair: Sorry. Mr Maxwell, once again you are talking about “we”. This is unusual for an NAO Report. As we highlighted at the beginning and as Mr Phillips has reiterated, it is about you as a manager and about Mr Grimshaw as a manager. You are both here. You have a chance to defend yourselves or explain it. Can you talk about “I”?

              Liam Maxwell: Okay. I will talk about “I”. I arrived at the programme to try and resolve a particular set of tasks, which were to enable a service to be delivered to the farmers and to make sure that people could register, and register quickly, for it. There was a lot of history when we arrived at the programme. We tried to dispense with that and we tried very early on to make sure that we had very clear boundaries as to which areas of the programme we would work on and which areas we would not. Inevitably, some of the time we were taking decisions very quickly. I am never going to defend myself as being the most conciliatory person when we are facing an issue that needs to be resolved, but we dealt together and worked together professionally to make sure that we got the solution that we needed to get to.

              Q71 Chair: It doesn’t sound very professional. Mr Grimshaw, you are next.

              Mark Grimshaw: Absolutely. I have already said to this Committee that I regret my inability to be able to explain the situation. On Mr Phillips’ point about the cost to the taxpayer, the outcome that we have achieved is going to be beneficial to the taxpayer.

              Q72 Stephen Phillips: I am not interested in that; I am interested in your dysfunctional and inappropriate behaviour at the top. That is what the Report says, and the Report has been agreed by the Department.

              Mark Grimshaw: I am going to repeat myself, but I have already apologised in terms of the regret that I have in my inability to be able to explain the challenges. However, the review goes back to the beginning of the programme. I do not believe it just refers to the period when Liam was the SRO.

              Q73 Stephen Phillips: This is talking about especially from mid-2014. See the end of the preceding sentence.

              Chair: That is just before Mr Maxwell came in.

              Mark Grimshaw: It also refers to senior officials, which is broader than just Liam and me.

              Q74 Chair: You are here in front of us; that is why we are asking you to explain.

              Mark Grimshaw: Yes, and I have already apologised.

              Q75 Stephen Phillips: Can I just check, Mr Grimshaw, that you are paid £160,000 a year by the taxpayer?

              Mark Grimshaw: Slightly more than that, actually: £161,000.

              Q76 Stephen Phillips: Ms Moriarty, you have read and agreed the Report, and you have heard the defence that has been given today. What are you going to do? Who is going to carry the can for this?

              Clare Moriarty: At the point when I arrived in Defra—

              Q77 Chair: In August this year.

              Clare Moriarty: Yes. The changes had been made in March. At that point we were running a different system. The GDS involvement has been much less. I have not seen the dysfunctional behaviours. I am extremely interested, going forward, in the behaviours exhibited within my team. I put a lot of time and effort into working with all of my team to make sure that behavioural issues are surfaced and addressed and dealt with. I have done that in previous teams. I am doing that very actively in this team, as Mr Grimshaw will no doubt confirm. So I am working with the current reality.

              Q78 Stephen Phillips: I don’t want to interrupt you. This is all very nice—it is all going to be rosy going forward, and the problems are behind us—but has disciplinary action been taken against anybody?

              Clare Moriarty: Not to my knowledge.

              Q79 Stephen Phillips: Why not?

              Clare Moriarty: I don’t know whether Ms Hill wants to comment, but—

              Q80 Stephen Phillips: Okay, it’s after your watch. Ms Hill, do you want to have a go? Why hasn’t disciplinary action been taken against anybody?

              Bronwyn Hill: I took account of the behaviours in the performance reviews that I was responsible for, the Defra-related ones. I did not feel that disciplinary action was justified, because all senior leaders—I include myself among this—usually have great strengths, as well as things that they need to work on. I took the view—it was a judgment: my judgment—that this should be taken into account in performance review at the end of the year; and I can assure you that it was, and feedback was given.

              Q81 Chair: Was there any financial penalty?

              Bronwyn Hill: The main way of incentivising people at this level, I always find, is reputational, rather than financial, but I can confirm, because it will be in the accounts, that no bonuses were given at the most senior levels in the Defra senior civil service for this programme.

              Q82 Stephen Phillips: I will tell you what would happen in the private sector with dysfunctional and inappropriate behaviour among top managers. They would be fired.

              Bronwyn Hill: Can I just take you back, though, to our earlier discussion about SROs and frequent changes? I had to make a judgment as to whether the programme could succeed—and remember, the importance of paying farmers was uppermost in everybody’s minds—if either person left, at different stages. Obviously there was a changeover. I took the view that, in the interest of the programme, I needed to keep Mr Grimshaw working and leading this programme, and I will stand by that judgment.

              Chair: I am going to bring in David Mowat. We are tight on time, because there is a vote coming.

              Q83 David Mowat: It strikes me that the roots of the dysfunctional behaviour that we have just been discussing occurred quite early in the programme—it occurred when the reset took place. As I understand it, we had a programme here with a risk of losing a great deal of taxpayers’ money if it was late—quite a high risk, and indeed that is what happened: £600 million. This reset occurred and seven criteria came out of the Cabinet Office, each one of which increased the delivery risk of the programme. Would that be a fair summary?

              It may well have been what the Government wished to do strategically, but each one of these seven points that the National Audit Office have put to us increased the delivery risk of the programme. As we saw the thing roll out like some kind of Greek tragedy, it all started to go wrong, and the personality issues arose, with one group of people who wished to get this thing delivered and avoid the £600 million penalty that the taxpayer is paying as a result of this debacle, and the Government’s strategic IT direction, which wished these seven things to be in its exemplar programmes. Mr Maxwell, do you agree with what I have just said?

              Liam Maxwell: The £600 million referred to the previous scheme. This was one of 25 programmes which were done in a similar way, where similar changes were introduced to—

              Q84 David Mowat: Yes, you always answer this question by that point. What you are saying, then, is that 20 of those 25 were fine and five were not so good, and this is one of the not-so-good. The implication, therefore, of what you just said is a problem with the people running the programme.

              Liam Maxwell: We work together as a team, so I think where we fell down was that we did not provide enough support and check there was enough support within the Defra environment to make sure that those changes, or that changed approach, could land effectively. To be really clear, I do recall, when I turned up, the absence of somebody who could talk the whole way through the system; the absence of that level of system integration—

              Q85 David Mowat: The ability of somebody coming in and raising points like this—it is power without responsibility. It is an absolute definition of power without responsibility, because you did not have delivery responsibility, but you had an oversight role and the ability to actually say, “We wish you to follow our processes, because for the Government as a whole these are the right directions to go in,” just because you are trying to run this project with a huge delivery risk—which played out.

              It is no wonder there were personality conflicts. You had somebody with power without responsibility insisting on this, and some other person supposed to be delivering it. There is bound to be a clash, and then the permanent secretary is dragged into this, and because one of your seven things was that they were not even allowed to hire a contractor, because there was a different way of delivering this, apparently, now, you find permanent secretaries, as we have found today, making detailed points about how delivery engines fit with online front ends, in a completely—in my view—inappropriate level of dialogue. It is all caused by this reset.

              Liam Maxwell: Obviously one of the core components that we learned from this was much greater support and much greater help to make sure that the right people were in post in the Department. Since 2013, we have put in place more than 120 senior technology leaders in Departments to make sure that we have better capability across government, in order—

              Q86 David Mowat: Yes, but we are not discussing that; we are discussing what you did to this programme, not what you did to the other ones that worked, which we are not looking at. Let me ask Mr Grimshaw perhaps—this reset that was forced on to Defra due to central policies, was it useful to you?

              Mark Grimshaw: The reset caused a number of difficulties, as outlined in figure 4 of the Report, and some challenges for the Department. I think the biggest issue that the Department faced was that it was at the bleeding edge, rather than the leading edge, when these were introduced.

              Q87 David Mowat: This apparently was chosen to be the first ever implementation of G-Cloud. I asked myself why it was that a high-risk programme like this was put on the bleeding edge of technology. I am interested. You were the guy sitting there on the bleeding edge. Were you happy to be given all these requirements to meet, as well as having to deliver what obviously turned out to be rather a hard thing to deliver?

              Mark Grimshaw: For the sake of clarity, I took over as SRO in May of this year, but I have been involved in the programme since its inception and the introduction of these seven fundamental changes certainly created more difficulty for the Department and for the programme itself.

              Q88 David Mowat: Right. But the position of the Cabinet Office was that it was a price worth paying.

              Liam Maxwell: I don’t think that was the position of the Cabinet Office.

              Q89 David Mowat: But you did things to make a programme and, let’s face it, the Government have a track record of failure in big IT projects, so we ought to be doing things to make them easier to deliver, not harder to deliver. You have come up with a lot of recommendations that we have just heard the project thought made it harder to deliver, therefore you must have thought, “It’s a price worth paying.” Getting all this—

              Liam Maxwell: The approach that we took at that time—I am afraid that I may speak only for my time as the SRO on this project—or, as an observer of what was going on, one of the things that we did was to try to make sure that people had the resources and the capability to deal with the change in technology approach that we had in place. I would be quite clear in saying: was the technology leadership within this Department as strong as it was in the other components and the other Departments that the exemplar programmes went into? I don’t think it was.

              Q90 David Mowat: Were you part of the reset?

              Liam Maxwell: The spend control process that went through that process, we agreed to allow the programme to go in that direction. The reset direction was actually agreed in a memorandum of understanding between Mike Bracken and Ian Trenholm very early on in the—

              Q91 David Mowat: My colleague Mr Evans needs to speak now, but I will just say this. You have just said or implied several times this afternoon that your other exemplar programmes were fine, but there was something wrong in Defra. That is really what you have said and therefore, I guess, what you think. All I would say to that is, when you were doing, or part of, a reset and you thought that Defra had a weak team or a weak project management group, that should have been part of your reset process. It should have been part of it—

              Liam Maxwell: Yes, I agree.

              David Mowat: It should not just be these things that sow the roots of failure.

              Liam Maxwell: I think we are agreeing with each other. One of the core lessons that we learned was that we have to check that the capability is in place when we ask people what they will do with the money that they are spending.

              Q92 David Mowat: There is a risk of power without accountability. I will leave it there.

              Liam Maxwell: There definitely is.

              Q93 Chris Evans: I have to be super-quick. I want to know why there are so many regional variations. The last thing you want to be, according to the Report, is a farmer who grazes common land living in Wales, Scotland or Northern Ireland. Why is that? Can you explain that, please, Mr Grimshaw?

              Mark Grimshaw: Wales, Scotland and Northern Ireland are not areas that we cover with this particular BPS scheme. They have their own devolved authorities and they run their own schemes.

              Q94 Chris Evans: That is a bit of a cop-out, isn’t it?

              Mark Grimshaw: No, not at all. That is exactly what devolution delivers.

              Q95 Chris Evans: Well, the majority of farmers in Wales are only receiving part payments in December. What would you say to a farmer in the north—I am thinking in particular of hill farms, which have increasing pressures—who depends on the payments, may not receive those payments until February and has the bank foreclosing on them? What advice would you give to them? They are dependent on these payments.

              Mark Grimshaw: The payment window runs from 1 December to 30 June. It always has done and probably always will do. There is a requirement for people to do their cash-flow forecasting based on that period. Personally, I am very disappointed that as an agency we are not able to deliver to the high standards we have delivered to in previous years. It bothers me on a personal basis that I have not been able to deliver 95% of payments on the first banking day of the year. I am putting everything in place that I can to turn that situation around, to pay the majority of customers by the end of December and the vast majority by the end of January. That is a personal commitment I have made to the Department, the NFU, our customers and the Environment, Food and Rural Affairs Committee.

              Chair: May I thank you on that point? We will hold you to that commitment. I am sure you will be back again. We have a resident expert on this issue on the Committee, as it such a running issue. We have to run to vote. I will ask Clare Moriarty to stay. If you believe that you need Bronwyn Hill, you can work that out between you. We just want to talk about flooding for 15 minutes once we return from the vote. Thank you for your patience.

              Sitting suspended for a Division in the House.

              On resuming—

              Q96 Chair: We are broadcasting again. I would like to welcome back Clare Moriarty, the permanent secretary at the Department for Environment, Food and Rural Affairs. You know why we have held you back, Ms Moriarty—we gave you notice that we wanted to ask you just a few questions about events over the weekend. It would be helpful if you could tell us whether you think flood defences have failed.

              Clare Moriarty: We don’t think that the flood defences that we put in place have failed. Apart from one instance, all of the flood defences held the water up to the height to which they were built. The issue is that, in pretty much all of the places where we put flood defences in place in Cumbria, the water rose higher than the top of the flood defences by very significant margins—we are talking about half a metre above the level of the flood defences. So from that point of view, they did not fail.

              Q97 Chair: You say they failed in Cumbria. Did they therefore hold up in other parts of the country, or is it just that Cumbria had the biggest problems with the rain?

              Clare Moriarty: The place where there was a failure—where there was actually a breach of the flood defences—was in fact in Lancashire. Broadly speaking, across most of the north, there were a lot of places where there was very high rainfall, but it was Cumbria where the flood defences were consistently overtopped—that is the technical term to describe the fact that the flood defence contains the water up to a certain point, but if the water goes higher, it will come over the top.

              Q98 Chair: Have you got a figure for the additional amount of money that could have been spent to prevent this from happening, or was it just about not planning for this level of flood water?

              Clare Moriarty: It is essentially about what we plan for. The flood defences that we are talking about—Kendal, Keswick, Cockermouth, Penrith, Carlisle—were essentially built to around one in 100. They are recently built flood defences; they have been built in the last five to 10 years. What the modelling estimated was a one in 100-year event From a statistical point of view, it is possible for two one-in-100 events to occur within five years of each other, but we are inevitably asking ourselves whether this is something that is statistically perfectly possible, but not very likely, or whether there is something in the way that things are changing which means that we should ask ourselves whether we are going to get the results from the flood defences we are expecting.

              Q99 Chair: You may have answered my question, but just to be explicit, had the Environment Agency reduced or stopped the funding for any of the flood defences where flooding occurred over the weekend?

              Clare Moriarty: No.

              Chair: No. That’s fine. I want to hand over to Anne-Marie Trevelyan, if she has caught her breath. She has some local issues. Then I will bring in other colleagues.

              Q100 Mrs Trevelyan: My first question, Ms Moriarty, is, can you tell me and the farmers whether the payments—

              Chair: Sorry. We are talking about flooding.

              Mrs Trevelyan: Yes, absolutely. The flood defences are very much aimed at property protection. In large part, they worked very well, but the quantity of water was so great that it was impossible to deal with. Those in the rural areas have also been very badly affected—roads have been washed away, and all the infrastructure has been badly damaged. Is the RPA likely to be able to make farmers’ payments so that that is one less thing for them to worry about while they put together the support they need, without the assistance that Bellwin is going to give to people whose houses have been flooded?

              Clare Moriarty: Two things. One is we will certainly look at whether we can prioritise the remaining farmers in those areas to make sure we pay them. I can’t, off the top of my head, say whether we can do that, but I know that, technically, it is possible to identify particular groups of postcodes and to pay on that basis. We have paid 55% of small farmers, and many of the farmers that you are talking about will be in that category, so the payments are moving on but certainly we will look at that. As part of the package that the Chancellor announced earlier today, there is also an element for restoring farmland, which we will pay as part of the rural development programme. Where farmers need support to remove debris, to fix hedging and fencing, we will make sure that we have money available to pay those claims.

              Q101 Chair: That will come through you, rather than through the Bellwin framework?

              Clare Moriarty: The way the structures are set up, that is part of the RDPE, and so we would expect that to be paid via the Rural Payments Agency, but we are looking at ways of making sure that we have got the right kind of one-stop-shop arrangements for farmers so that they are not going through lots of different systems.

              Q102 Chair: May we just be clear about this? If a farmer is watching this and they have been flooded, you say there will be a one-stop shop. What, today, do they do to make sure that you know that they need their payments quickly so you can try to prioritise those? Do they ring you up? Is there a hotline number? Is there a website link?

              Clare Moriarty: There is a single rural hotline number, which I sadly do not have in my head, but if any farmer went on to the Rural Payments Agency website, which I am sure they are familiar with, they would find that. That is the most straightforward way of getting in touch with us.

              Q103 Mrs Trevelyan: On the wider issue of managing and alleviating future problems, is the Department going to start looking at a much more coherent plan for planting trees in the upland areas of these big river basins where this is continuing to happen? There is seemingly going to be a continuous problem of flooding unless we hold the water higher up, and one of the most effective ways of doing that, if not building lakes, is trees.

              Clare Moriarty: We will certainly be doing a very thorough lessons learned exercise looking at what we have in the way of flood defences, particularly in the north-west. We would do a lessons learned after any flooding, but this is flooding on such an extreme scale that we will make sure that we do a very thorough look and really understand what the options are.

              Q104 Chair: Clearly, one of the issues around supporting flood maintenance and planning is having longer funding periods so that the money is not stop-start, with a bit this year but maybe not next year. What progress have you or the Department made in negotiating with the Treasury longer term maintenance and capital funding payments for flood defences?

              Clare Moriarty: We are part way through a six-year settlement in terms of the capital funding for flood defences. As part of our spending review settlement for the next four years, we will be protecting flood maintenance spending in real terms. That is not a 20 to 30-year period, but certainly we have made those commitments in terms of the next four or five years.

              Q105 Chair: So are you saying that you have not made progress in getting a longer planning period for flood defences? Four years is fine, up to a point, but it only takes you up to four years. Some of these are big projects and, as you have identified, there will be a lot of discussion about whether the projects that were built were big enough, high enough, tall enough and robust enough to deal with the events of the weekend. Will you be negotiating and trying to push Treasury—perhaps pushing Treasury is bit optimistic, in the Whitehall machinery—or raising with the Treasury concerns about the short-termism of four-year planning?

              Clare Moriarty: Generally speaking, all this funding comes through the four-year or five-year spending review cycle. There was an agreement to a slightly longer period, following the 2013-14 floods. We need to make sure we understand what we need to do, and if the way of delivering is that we want to look at longer-term funding, I think we would have the conversation with the Treasury at that point. It is not a conversation we have had to date, and it is a difficult thing for the Government and Parliament to commit money in the very long term, but it is a conversation that we could have.

              Q106 Chair: Of course, one of the approaches to funding the Government took was to look at £600 million of partnership funding, so contributions from private sector for flood defences. How much of that £600 million has been secured to date?

              Clare Moriarty: From recollection?

              Chair: Yes. We recognise that we asked you at quite short notice to talk about this.

              Clare Moriarty: I think £250 million is absolutely banked and locked down.

              Q107 Chair: Who is that from?

              Clare Moriarty: From a variety of sources. Quite a bit of it is from local authorities, and some of it is private sector funding.

              Q108 Chair: Could you write to us with a breakdown?

              Clare Moriarty: Yes, we can certainly write to you. We have written quite recently to Defra on the same subject.

              Q109 Chair: Remind me, when was the partnership funding announced? How long have you been trying to get the £600 million?

              Clare Moriarty: I think it probably went with the current package, so it is probably a year or so, but I will not guess at that. We will cover that in the letter.

              Q110 Chair: I was just thinking that that is less than half of the partnership funding. We just had catastrophic floods at the weekend. Are you optimistic that it is possible to get £600 million? I am still puzzled as to why a private business would want to put partnership funding into flooding, when it might think it is the Government’s or the taxpayer’s job to pay for it.

              Clare Moriarty: The £250 million is not—we are not looking at blank space for the other £350 million. We have a good idea where most of it is going to come from, but we are in the process of locking down those arrangements.

              Q111 Chair: How long will that take?

              Clare Moriarty: I will have to send you a note on that, because I do not have the detail.

              Q112 Chair: Fair enough; we are not critical of that, but it would be helpful to have a note on how long you expect it to take to pin down that £600 million. It is pretty urgent for people who cannot go back to their homes for some time as a result. The Chancellor today talked about £5,000 for every household, which I understand is a £50 million fund of Bellwin money, according to my colleagues. How can people apply for that money? Is it straightforward or do they have to jump through many hoops to get it? Can you explain how I, if I were a flooded householder, could apply for my £5,000?

              Clare Moriarty: If you were a flooded householder, I would advise you to go to your local authority, because that money will be administered through local authorities.

              Q113 Chair: Do you know how long it will take for people to get the cash in their hand?

              Clare Moriarty: I don’t.

              Q114 Chair: Any idea from previous floods? I know it was before your time.

              Clare Moriarty: Unfortunately not, having not previously been a flooding expert. Shall I ask the DCLG to provide you with some information?

              Q115 Chair: If you could, it would be very helpful. Colleagues who knew you were in front of us today would be very keen to know. I am an MP for an area where there were riots, and I am aware that it took a long while for riot money to get through to businesses and individuals affected. The announcement in the House of Commons or in the media is all very well, but this is about how it affects our constituents on the ground.

              In March 2015, we put out a Report—it was just before your time, so let me you remind you—in which we talked about long-term revenue funding being required. I touched on that just now. The response from your Department—again, it was just before your time—was that it would come through in the comprehensive spending review, which I think we felt was a bit “long grass”. The comprehensive spending review has happened. You indicated that you have a four-year settlement. I will ask again, to put it on the record: in terms of the long-term revenue funding required, do you have in your mind what an ideal settlement would be? This is your chance, Ms Moriarty, to put out your wish list. We have a Treasury official here listening, who I am sure will report right back to the Chancellor’s office. What would you need to ensure that this does not happen and that people’s lives are not devastated in this way again?

              Clare Moriarty: Revenue funding is principally for maintenance. Certainly, the flooding events we have just experienced have not by any stretch of the imagination been down to a failure of maintenance funding. We have been through the spending review, as you say, and secured full protection for the floods maintenance budget. In a sense, to know that we may continue that kind of protection would be an ideal position to be in. Equally, we continue to look for more efficient ways of maintaining assets.

              The good position we are in for the next four years is that we will look for more efficient ways of doing things, but we also have the money protected, so that should allow us to do more maintenance with the budget we have. Long-term revenue funding would look like effectively running that number out into the future. I don’t know whether that is something we will realistically be able to get to, but I will certainly go back and read that report.

              Q116 Chair: Our Reports are gripping, and I am sure that one is, from memory. My final point—colleagues may want to come in on this—is about the common agricultural policy delivery programme, which we just discussed. You heard the tone of the Committee’s concerns about that. One concern that got teased out in that session was the lack of applications by farmers for pillar 2 funding—to remind anyone watching, that is the environmental improvement money that farmers get. I have spoken, as has Anne-Marie Trevelyan, to farmers who say, “It’s just not worth the hassle, because it’s so complicated.” That is CAP policy, but some of that money was used by farmers for flood management on farmland. Do you think that the failures in the programme that we were just discussing mean that the Department will be less able to achieve desired outcomes for flood management?

              Clare Moriarty: We are very hopeful of achieving good outcomes through the countryside stewardship, and indeed better outcomes than through its predecessor, the environmental stewardship scheme—

              Q117 Chair: You say that because no one applied.

              Clare Moriarty: Many people are already in environmental stewardship schemes.

              Q118 Mrs Trevelyan: They are running out.

              Clare Moriarty: They will run out, but none of them have run out yet. We had 2,800 applications for the new countryside stewardship scheme, which effectively involves largely people terminating existing agreements and transferring into the new agreements. It does not represent the run rates that we expect in future. That is partly, I absolutely recognise, because of the difficulties that were experienced and the way in which the schemes are run. We are certainly hopeful and expectant of seeing a significantly higher application rate for countryside stewardship in 2016, and we are very committed to that as an important means of securing environmental outcomes.

              Q119 Chair: Will you be doing anything to support and help farmers do more on flood management, in terms of that stewardship compared with some of the other eco aspects of their farming?

              Clare Moriarty: That is a very good question. May I take it away and ponder it?

              Q120 Chair: Thank you. I appreciate it. You had a bit of notice, but you as a Department have been dealing with a difficult issue.

              Finally, have you got any words of comfort about how quickly the Government can move to ensure that other people who feel worried about what might happen weather-wise over the winter and those who have been affected can get help? Is there anything that you would like to say to our constituents and to the taxpayer about the Government is going to tackle this, as you are the Department head responsible?

              Clare Moriarty: We are absolutely committed to making sure that people can access help and support as quickly as they possibly can. It is noticeable that here we are on Wednesday, and the rain fell on Saturday and Sunday. We have already had an announcement by the Chancellor, and my Secretary of State announced the Bellwin scheme in her statement on Monday. The Government have moved at great pace to make sure that we can reassure people that there will be support available.

              I absolutely take your point that the critical thing is making sure that we get money to people. I know that one thing that people experienced after the last major flooding event was that some of the schemes took a long time and were quite bureaucratic. That has been taken into account. The recovery schemes that we are putting in place this time are simpler, and are run through local authorities, very much with the aim of making sure that we get help and support to people as soon as we possibly can. It is devastating to find yourself out of your house, particularly at this time of year. Nobody wants to be in that position.

              Q121 Chair: Thank you very much. I know that the Select Committee on Environment, Food and Rural Affairs will call you again in January, so we will watch that as well. It is an issue that I am sure we and the National Audit Office will return to at some point. We do it after the event, so we are not likely to see you for some time on flooding. Thank you for coming to both sessions. We look forward to seeing you again, no doubt several times, in 2016. In the meantime, have a happy Christmas, and let us all hope and pray that there are not more floods of this nature. I am not so worried about you disturbing your holiday; I am thinking—

              Clare Moriarty: It is a very important point. We are conscious—we look at the weather all the time—that there is potential for further bad weather, and we are absolutely committed, again, to making sure that we have everything possible stood up and ready and that communities are defended, because flooding is one of the worst things that could possibly happen.

              Q122 Chair: Although, to be fair, if the flood defences are not there now, there is nothing much you can do. Is that fair to say?

              Clare Moriarty: Well, we have quite a lot of what are called demountable defences. The Environment Agency can take quite a lot of temporary flood defences to areas. When we see high flood risk approaching, they will go to that area. There are things you can do in terms of making sure that every flood defence is working as well as it possibly can and clearing out things that might have got stuck. Also, you basically stack the demountable defences on top of the existing flood defences, and you can gain yourself a significant extra amount.

                            Without those additional flood defences, some of the flooding that was experienced—particularly the impact on electricity supplies, with all that it means when people lose power—would have been a lot worse. I hope that that is a tiny bit of comfort that pumps, demountable defences and all the assets that we have and take to the places where we know there might be risk, are genuinely helping protect people from the impact of floods.

Chair: Thank you very much indeed for coming.

              Oral evidence: Early review of DEFRA’s Common Agricultural Policy Delivery Programme: progress update, HC 642                            1