Interventions by the Government Digital Service (GDS) “hindered delivery” of a new rural payments scheme, according to a new report by MPs on the Public Accounts Committee (PAC).
The Rural Payments Agency (RPA) programme reforming how EU subsidies are paid to farmers was designated as a 'digital exemplar' project in 2013, and the GDS introduced seven significant changes to the project.
“These changes significantly increased the delivery risk and the chief executive of the RPA admitted they had created difficulties for the programme,” the report says.
The committee says that GDS did not assess whether the RPA and environment department (Defra) were capable of managing these changes and did not provide enough support during implementation of the project.
“The Government Digital Service was created to help improve IT projects,” the report says, “but instead hindered delivery of this programme.”
In future, it recommends, GDS should “comprehensively assess departments’ capabilities to deliver any changes it imposes and ensure that it provides an appropriate level of support for those changes".
Defra and the Rural Payments Agency began designing a new system to implement the EU's Common Agricultural Policy in 2012. This aimed to simplify the way payments were made, meet new regulations, and reduce the risk of EU fines for late payments to farmers.
The new system was introduced in January 2015, but after technical problems had to be shelved. The RPA introduced a “paper assisted digital” system instead.
The new system was originally forecast to cost £155m but is now expected to cost £215m, and penalties for not administering payments properly are set to increase.
Defra had planned that these fines – known as disallowance penalties – would cost around 2% of CAP payments, but now expects disallowance to reach up to 10% of CAP a year.
“The chief executive of the RPA told us that the designation of the programme as ‘digital by default’ may have been a distraction from the important task of developing the controls to protect taxpayers from disallowance,” the report says.
“We welcome digital innovation but it must be introduced appropriately, taking into account the capability of the department concerned and its customers.,” the committee says.
“In this case, GDS failed to take account of these considerations or provide adequate support. It lost sight of the outcome – which was that farmers be paid as quickly as possible.”
GDS's focus on creating a digital application system as misplaced, MPs say, as it was not a European requirement and was not “appropriate for farmers, who have a lower average level of digital literacy than the general population" and often face "poor broadband coverage in many rural areas".
“Frankly embarrassing”
The report also highlights the “unacceptable” behaviour of senior leaders within the GDS and RPA, saying: “Highly paid public servants need to get the job done and such behaviour is unacceptable.”
PAC chair Meg Hillier said: "It was frankly embarrassing to learn of senior and highly paid civil servants arguing to the detriment of hard-pressed farmers.
“Explanations such as ‘We worked on different floors’ and ‘We dressed differently’ are a slap in the face to them and a dismal excuse for failures that could severely hit the public purse.
“A fundamental part of setting up this programme should have been to establish a clear and robust vision of the final product, focused on the needs of farmers. For it to end up as a digital testing ground was wrong-headed.”
She added that: “If the Department is to build trust in this programme and other projects it first needs to rebuild trust with farmers.
“That starts with setting out exactly when it expects to pay them in future and we will be expecting the department to address this as a matter of urgency.”
“A fundamental part of setting up this programme should have been to establish a clear and robust vision of the final product, focused on the needs of farmers. For it to end up as a digital testing ground was wrong-headed.”
MPs are also concerned that Defra does not have enough incentive to reduce disallowance penalites, since these are paid for by ring fenced money from the Treasury which is returned if it is not used.
“HM Treasury should set out the mechanisms in place from 2016–17 to demonstrate that they are providing the budgetary incentives needed for the Department to do as much as possible to reduce disallowance penalties.”
Responding the committee's report, a Defra spokesman said: "The new CAP is widely acknowledged as the most complex ever and the task of setting up a new IT system to handle this additional complexity was a significant challenge.
"Throughout this period the collective focus has always remained on getting payments out to farmers as quickly as possible.
"In March 2015 there was a problem with one part of the online interface that enabled farmers to put data directly into Rural Payments, but the core of the system has always worked.
"Over 87,000 farmers registered on the system and it has been used to process and pay over 70,800 farmers – over 80% of all those eligible – their 2015 Basic Payment Scheme payment, totalling £1.11 billion.
"Almost all farmers in England will be paid by the end of this month and the Rural Payments system has been further improved for 2016 to make it easier for farmers to apply for CAP payments."