Ministers received upbeat reports on the progress of a £122m IT-based single payments scheme for farmers as the project headed towards the rocks, according to documents released last week under the Freedom of Information Act.
The documents - and a separate report published last week by the National Audit Office on the failed scheme for paying subsidies worth £1.5bn to farmers - confirm that ministers are not always given a clear view of the seriousness of problems with an IT-based project before the failure becomes obvious to MPs and stakeholders.
Delays in paying farmers by the Rural Payments Agency, part of the Department for Environment, Food and Rural Affairs, had caused them "stress and anxiety" said the National Audit Office in its report.
Farmers had to pay up to £22.5m in bank fees and interest when the agency failed to meet its target to pay 96% of the subsidies by the end of March 2006. Only 15% had been paid by then. The agency admits it may struggle to make some payments that are due over the next year.
At a briefing last week, officials at the National Audit Office said there was a general "can-do" attitude at the agency, which was not checked by the necessary scepticism.
When it became clear that the timetable for giving the correct payments to farmers on time was becoming impossible to meet, no attempt was then made by the government to ask the European Commission for an extension.
Phil Gibby, an author of the National Audit Office's report on delays in administering the scheme, said that Gateway reviews - checks on the IT element of a project - resulted in three successive red lights but "the project kept ticking along".
The report said, "An absence of clear metrics against which to assess progress on implementation led to overoptimistic upward reporting and hence a failure to show the true state of progress."
Alongside this failure, in the months before the scheme was confirmed as failing to meet its deadlines for paying farmers, ministers received regular briefings on the progress of the project. Many said the project was making progress and was "still on track to commence full payment by end-February".
Even by 18 January 2006 the briefing was in part optimistic. It said, "We continue to work towards full payments starting by the end of February, although it is clear that not all claims will be fully validated by that point."
At last week's briefing Gibby said, "This [scheme] has not been value for money. It has cost more than it should have done. It is not going to achieve the savings claimed for it, and it has caused stress and anxiety for some farmers. It is worse than some people had envisaged."
Another NAO official said, "The big problem with these projects is implementation. You can draw up schemes which look great on paper but the problem with the whole of Whitehall is that the closer you get to delivery the more reds [red light at Gateway reviews] you get."