Defra's Rural Payments Scheme beset by personal battles, staff changes and divergence with GDS — NAO

Strongly-worded report by the National Audit Office public spending watchdog finds cost estimates rose by 40% — but Defra defends handling of the “most complex ever” EU rural payments scheme

By matt.foster

01 Dec 2015

“Personal rifts”, frequent leadership changes, and a failure to coordinate the work of the Department for the Environment (Defra) and the Government Digital Service (GDS) led to serious problems with the system for delivering European Union payments to farmers, according to a scathing report published on Tuesday by the National Audit Office public spending watchdog.

Defra, GDS and the Rural Payments Agency (RPA) originally expected to spend £155m on designing and implementing a new system to implement the EU’s Common Agricultural Policy (CAP) in England. The CAP grants more than 100,000 subsidies to farmers in Britain every year, and the department aimed to overhaul the system used to distribute those payments in a bid to cut delivery costs, improve the customer experience, and reduce exposure to fines from the European Commission (EC).

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But the department was forced to shelve its online application system in March this year, instead reverting to “paper-assisted digital” schemes which have required manual data entry by the RPA. A revised business case for the scheme submitted to the Treasury this year put the expected costs at £215m, some 40% above the initial estimate.

The NAO’s report says that the original design of the programme was too narrow, focused on procuring IT systems at the expense of “wider organisational transformation”. And it highlights tensions between the Cabinet Office-based GDS digital team, Defra, the RPA and other government agencies.

“The different priorities of the organisations involved were not resolved and caused disruption and delay at the beginning of the programme,” the report says.

“The RPA’s priority was to pay farmers accurately and on time, and minimise the risk of disallowance penalties, while the focus for Natural England and the Forestry Commission was to achieve environmental outcomes and build relationships with their customers. The Cabinet Office aimed to encourage innovation, reduce costs and develop learning across government as part of the government’s digital strategy to build digital services based on user needs.”

The NAO says the programme was hampered by “numerous changes in direction, senior responsible owner (SRO) and governance”, pointing out that four different SROs led the project in just three years, “each from a different background and each bringing their own style, vision and priorities”.

“Repeated changes to governance arrangements have disrupted the programme and caused uncertainty and confusion for staff,” it says. “SROs have not been formally trained or enrolled in the Major Projects Authority’s Leadership Academy and not all had experience of delivering government major projects of this scale and complexity.”

According to the NAO, the department also “failed to prevent counterproductive behaviours by senior leaders”, with the spending watchdog saying there were “deep rifts between programme leaders at many stages of the programme’s history”.

It adds: “These went beyond the healthy tension that could be expected in a multi-organisational programme, not only hindering progress but also impacting on staff morale and stress. Despite attempts to resolve these behaviours, the department was not able to stop them.”

The NAO says that neither the Cabinet Office or Defra appeared to “fully” understand the risk implications of a series of changes to the programme, and says that government failed to properly consider how it would limit exposure to disallowance penalties imposed by the European Commission for errors. It also criticises a “good news culture” within the programme team and a failure to respond to findings by external assurers.

NAO chief Amyas Morse said the report’s findings showed that Defra, the RPA and GDS had “not worked together effectively”.

“There are serious lessons in this episode for all three,” he added. 

“This means that costs have increased and systems functionality has not improved at the rate expected, either in the back office or the user-facing front end. This does not represent value for money at this stage. 

“One consequence of this is that the department faces difficulties paying farmers accurately and at the earliest opportunity.”

"Making progress"

In spite of the major setbacks identified, the NAO says the department is now “making progress” towards its target of having the majority of claims made by farmers processed by the end of the year.

“Implementing these recovery actions and containing the costs of the revised approach is a significant challenge, and the department is making good progress to meeting its target of paying BPS claims for the majority of farmers in December,” it says.

“However, significant challenges remain to make sure this year’s payments are accurate, to prepare for future years, maximise programme benefits and minimise disallowance penalties.”

A spokesperson for Defra said the changes to CAP initiated at a European-level had made the programme the “most complex ever”, and said new IT had been needed “to handle this additional complexity and to make claiming as simple as possible for farmers”.

They added: “While there was a problem with one part of the online interface that enabled farmers to put data directly into Rural Payments, the system has always worked and has successfully started making accurate payments to thousands of farmers on the very first day of the payment window.

“The Rural Payments system will be further improved next year to make it easier for farmers to apply for their CAP payments.”

Meanwhile, a separate statement from the Cabinet Office defended GDS’s role in the programme, saying the team was “leading a monumental change to public services”.

The statement added: “Over the last three years we’ve saved taxpayers £3.5bn through reforms such as the award winning GOV.UK and transforming 20 over the biggest services to make them simpler, clearer and faster.

“The CAP programme was one of the earliest and most ambitious of these services. We build services in a way that enables us to test and improve the system based on user feedback before it goes live, and gets away from the old days when problems were often not discovered until it was too late. 

“We’ve learnt a number of lessons during the development process for this programme, which we take with us for similar programmes. We value the NAO’s feedback, and will study its recommendations in depth.”

"Clear vision"

The report says the department should clarify how it will monitor progress on the programme in future, and ensure that the diversion of resources to address problems with the scheme do not come at the cost of the long-term aims of the overhaul.

And it calls on the department to “develop a clear vision that withstands any future change of SRO” as well as ensuring that future project leaders have “appropriate experience and training relevant to the role”.

The NAO adds: “The department should review how it sought to address personal rifts in the programme. It should identify relevant lessons to improve future performance and ensure that such behaviours can be addressed and seen to be addressed.”

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