RPA officially on the naughty step

“Oversight of the Single Payment Scheme is a singular example of comprehensively poor administration on a grand scale.”

This statement opens the second paragraph of the Public Accounts Committee’s (PAC) latest report, and it clearly pulls no punches. DEFRA and the Rural Payment’s Agency (RPA) are set to receive more heat for the handling of the EU devised Single Payment Scheme (SPS).

The report systematically identifies why the RPA has continued to mismanage administering the SPS, and the tone is rightly stern. While the PAC has highlighted numerous contributing factors, it seems that DEFRA and the RPA’s refusal to accept mistakes is a big obstacle to achieving any significant change.

The PAC highlight the new £350 million computer system – another Government IT failure – as a major problem. Perhaps unsurprisingly an additional £84 million went on consultancy costs, so that the computer system could be maintained on a day to day basis. Neither DEFRA nor the RPA were able to provide satisfactory explanations for this astronomical sum, yet the computer system continues to be hampered by inaccuracies, which means the problem of overpayments persists. The PAC calculates that the Agency is likely to have made overpayments of between £55 million and £90 million but have only recovered some £25 million. Because the computer system is so riddled with mistakes the process undertaken for recovering overpayment is described by the committee as “unacceptable.”  Letters were sent “out of the blue with baffling calculations” which farmers were forced to pay in order to receive the remainder of their 2008 claim. Later, the RPA compensated these farmers with a cheque for £250. However, the PAC stated:

“We would be surprised if the average ex gratia payment to farmers of £250 reflected the stress and anxiety experienced and additional costs they might have incurred as a result of the uncertainties.”

The PAC confirms that the shambolic mismanagement of the SPS has not only been a bitter pill for taxpayers but has a huge human cost.

Senior management is also identified as an area of weakness, particularly in regard to the Recovery Campaign. However salaries and performance related bonuses have amounted to £845,000-£890,000 in 2008-09, compared with £757,000-£792,000 in 2007-08: a classic case of rewards for failure.

The complexity of the type of payment scheme undertaken by the RPA – the Dynamic Hybrid model – continues to be highlighted as a major factor in the mismanagement. The cost of administering each claim in England in 2008–09 was £1,743, around six times that of Scotland.  However administrative complexity alone is not the only demon facing the successful implementation of the SPS. Other underlying problems exist within RPA and its parent department themselves.

Neither DEFRA nor the RPA offer satisfactory explanations to explain why it costs £84 million in consultancy fees to maintain a computer system that is central to administrative failure. Or why senior managers have received higher salaries and performance related bonuses. Their combined refusal to acknowledge the full extent of the costs of their failures inevitably means that they will not take decisive steps to reduce costs in the future. It’s obviously the reason why the PAC has decided to produce such a direct report, reprimanding the RPA so openly:

“Rather than put their energies into tackling the high processing costs, the Department and its Agency have muddied the issue by looking for ways to understate the true figures. This Committee takes a dim view of such ‘smoke screen’ tactics, which seem designed to play down the seriousness of a situation by questioning the facts of a National Audit Office report when there are no strong grounds to do so.”
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