British farmer payment system faces budget blow-out

The cost could rise to £500 million, UK govt accounts watchdog claims

A powerful committee of MPs has savaged the UK Rural Payments Agency’s disastrous implementation of the Single Payment Scheme for farmers, warning that the failed £122 million (NZ$346 million) IT project could yet cost up to £500 million.

The damning verdict of the Commons public accounts committee follows the RPA’s admission that it will not be able to stabilise the IT systems for processing Single Payment Scheme claims until 2008 — three years after the plan’s introduction.

Committee chair Edward Leigh describes the implementation of the Single Payment Scheme to a “near-impossible” timescale as “a master class in bad decision-making, poor planning, incomplete testing of IT systems, confused lines of responsibility, scant objective management information and a failure by the management team to face up to the unfolding crisis.”

He adds that the taxpayer has “taken a large hit — with a potential additional liability approaching half a billion pounds”.

The MPs’ report catalogues a series of mistakes made in implementing what was from the outset a highly risky project. It notes that implementation began before the specification for the Single Payment Scheme had been finalised, forcing the RPA to make 23 substantial changes to its computer systems to reflect policy and regulatory revisions.

The RPA made implementation “unnecessarily complex” by choosing a complicated option for calculating farmers’ entitlements, setting a one-year timescale and refusing to set a minimum level for claims, the report says.

It adds: “The agency tested each key element of the IT scheme before introduction but testing in isolation did not fully simulate the real world environment and problems emerged later.”

A contingency system was “mothballed” because it would have experienced the same data accuracy problems — even though this would have enabled the RPA to handle the Single Payment Scheme on a claim by claim basis, rather than the task-based approach that was later identified as contributing to problems with the plan.

Those overseeing the plan as the fiasco unfolded “found it difficult to distinguish between real progress and inherent optimism within the project team” because the RPA had put off development of software that could monitor the progress of claims, in order to focus on areas it considered critical, the MPs found.

Project management suffered as the department for environment, food and rural affairs (Defra) and the RPA each set up separate boards to manage and challenge the project, leading to “a lack of clarity as to which Board or individual was ultimately responsible for decisions”. The plan also had two senior responsible owners.

The report also criticises the RPA for trying to implement the Single Payment Scheme while carrying through a wider business change initiative. “The computer system became a key feature of the agency’s reorganisation plans to reduce staff numbers”, the report notes.

The project unravelled after three out of four Office for Government Commerce gateway reviews between May 2004 and February 2006 rated it as “red”. But former RPA chief executive Johnston McNeill “felt unable to show that it could not be delivered”, the MPs noted.

McNeill later lost his job over the fiasco. But the report adds that the then-Defra permanent secretary, Sir Brian Bender, “bears responsibility for administrative failure leading to additional costs that together risk exceeding £400 million.”

However, the public accounts committee stopped short of echoing the environment, food and rural affairs committee’s calls for the cabinet minister and top civil servants in charge to resign or be sacked.

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Tags managementcommons public accounts committeedefrarural payments agency

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