Rural Payments Agency

Tuesday 20th July 2010 Written Statements

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

The Rural Payments Agency (RPA) delivers £2.3 billion of common agricultural policy payments each year to the businesses and organisations which produce our food and maintain our rural economy, cultural heritage and environmental landscapes. Farmers applying for the single payment scheme payments from the Rural Payments Agency have experienced a turbulent few years. They deserve a better quality of service.

I am today publishing an independent review of RPA, completed by David Lane working with Deloitte, PWC and Gartner, and the Government response to it. Copies of the executive summary have been placed in the Libraries of both Houses. The related reports are available on the DEFRA website.

The review was commissioned by DEFRA in September 2009 and gives an evidenced view of RPA’s current state as well as preparations for the EU-wide common agricultural policy negotiations, expected to conclude in 2013. The review’s key findings are that:

RPA’s finance function and controls need to be strengthened, and that it was particularly concerning that the agency management could not form a view on the value of the debts that were on RPA’s accounts;

there are significant opportunities to provide a better quality of customer service and deliver efficiencies through improvements in the operational processes;

that a significant opportunity exists in developing new IT systems for post 2013, learning from the rushed implementation in 2005;

there was a lack of appropriate governance and oversight from within RPA’s leadership and DEFRA; and

there are considerable gaps in the organisation’s controls and leadership capability.

Since the well-publicised problems in implementing the single payment scheme in 2005-06, RPA has made significant improvements, particularly in the speed of making payments to customers. This has been achieved against a backdrop of a poorly specified IT system, which constrained the ability of staff to get the job done, and reducing staff numbers. However, there is significantly more to be done. The administrative cost per payment is too high and where there are problems, it takes too long for them to be resolved.

I will not allow this state of affairs to continue. We are moving into a new and challenging phase for RPA and the review highlights how important it is that RPA has the right capability in place to lead the organisation through this period and the right degree of oversight from DEFRA. I will personally drive forward progress by chairing a new oversight board. As announced last week, the chief executive is leaving at the end of July and we will seek a new chief executive from the widest available pool. In the meantime an interim chief executive has been appointed and I will make an announcement shortly on this. The interim chief operating officer and interim finance director appointments are due to end shortly. This gives the new chief executive the opportunity to build a leadership team to deal with the new challenges. I will work with the RPA management team to deliver the standard of services our customers deserve.

The key challenge for the agency is to deliver a better quality of service, while reducing the operating costs so that both farmers and taxpayers are getting a better deal. It is also to build a strong organisation that is ready to deal with the changes that are likely to come with the reform of the common agricultural policy. My priorities for action are:

Delivering improvements to customer experience through improving the accuracy of the agency’s information, while maintaining an acceptable speed of payments.

Ensuring that the agency is focused on improving value for money, aggressively pursuing efficiencies while balancing the need to provide a good service to farmers.

Ensuring that the agency becomes a more efficient operation, getting the basics like financial controls and accounts right.

Making essential preparations for the new schemes which are likely to be introduced after the 2013 common agricultural policy reform negotiations.

In the current financial climate, RPA will need to look radically at its operations and drive for efficiencies. Following the principle that Government should only do those things which only Government can do, we are examining how parts of the DEFRA network’s assets could be marketed or be run better through other partners, while protecting key DEFRA outcomes. In keeping with this principle, the review identified a number of options including outsourcing parts of or all of RPA’s operations. These options will be evaluated and considered by my RPA oversight board. There will need to be prioritisation between those investments which we can make, and focusing attention on those areas which will have the greatest impact.

I thank the review team for this report. I will be working with the oversight board, RPA staff, customers and Members of Parliament to ensure that all of the recommendations are carefully considered and action is taken. I will update the House on progress at appropriate times.