A minister who publicly disputed audited figures on the
costs of the IT-based Single Payment Scheme for farmers had
misunderstood his civil service briefing, a top civil servant has
claimed.
Farming minister Jim Fitzpatrick disputed figures published by
the National Audit Office when he
spoke to millions of listeners of the BBC Radio 4 "Today" programme
on 15 October 2009.
But his department's permanent secretary Helen Ghosh emphasised
to MPs this week that there was no dispute over the NAO's
figures.
Helen Ghosh told the Public Accounts Committee on Tuesday: "We
are not arguing with the figures ... I think he [the minister] had
misunderstood the nature of the briefing he had been given."
The episode highlights some of the difficulties facing
Parliament, farmers, the media and the NAO as they try to learn
more about the costs of the Single Payment Scheme and the extent of
the flaws in the system.
Farmers are paid an EU subsidy by a
£350m IT system run by Accenture and the Rural Payments Agency
which is part of the Department for Environment, Food and Rural
Affairs (Defra).
The rising costs of the Rural Payments Agency's IT
system
The system - which was based on Oracle financial applications, a
forerunner to the
e-business
suite - was originally due to cost less than £100m but it
underwent major changes, some to the Oracle source code, some of
which went undocumented.
An NAO director
Phil Gibby told the Today programme that the costs of
administering the Single Payment Scheme have risen by £300m more
than anticipated. On top of that, the EU may impose penalties of
£280m because many payments are incorrect; and a further £40m in
overpayments may never be recovered.
The Today presenter
Jim Naughtie put it to Jim Fitzpatrick that the NAO had
calculated the costs of processing each farmer's claim at £1,700,
which is about six times as much as the cost of processing claims
in Scotland where a different system pays subsidies to farmers.
Minister disputes NAO's figures
Fitzpatrick replied: "We don't accept those figures for a start
Jim. The Permanent Secretary of Defra and the Chief Executive of
Rural Payments Agency will be giving evidence to the Public
Accounts Committee later this month and answering fully. However we
don't recognise that figure of £1,700. Our calculation is that it
[the cost of processing each claim] has gone down from £750 to
£700."
Head of Defra claims there is no dispute over NAO
figures
But when Defra's Permanent Secretary Helen Ghosh, and Tony
Cooper, Chief Executive of the Rural Payments Agency, appeared
before the Public Accounts Committee this week they made it clear
there was no dispute over the figures and that the £700-£750 per
claim quoted by the minister excluded IT costs whereas the £1,700
included IT costs.
Public accounts MPs thought it pointless to calculate the costs
of processing each claim without IT costs included. But Ghosh said
it was difficult to show a reduction in the administrative costs of
the Rural Payments Agency if IT costs - which sometimes jump - are
included in the figures.
Public accounts chair attacks Defra for excluding IT in its
processing cost estimates
Edward Leigh, the chairman of the Public Accounts Committee,
told Ghosh: "How can you seriously argue that the administrative
costs of each claim should not include the considerable costs of
the bespoke IT system and other major overheads? It must do."
He added that Defra's lack of attention to IT costs and other
overheads may be symptomatic of a lack of control.
The Public Accounts Committee and the NAO are powerless to stop
costs rising and errors in payments continuing.
Jim Fitzpatrick's interview on BBC R4 Today programme - 15 October
2009