Departmental Annual Report 2007 and Defra Priorities

House of Commons Environment, Food and Rural Affairs Committee

Departmental Annual Report 2007 and Defra priorities

Oral and written evidence

Oral evidence taken on Wednesday 18 July 2007, Tuesday 23 October 2007, Wednesday 21 November 2007 and Wednesday 30 April 2008

Ordered by The House of Commons to be printed 18 July 2007, 23 October 2007, 21 November 2007 and 30 April 2008

HC 121 [Incorporating HC 957-i and HC 1100-i, Session 2006–07] Published on 17 July 2008 by authority of the House of Commons London: The Stationery Office Limited £0.00 Environment, Food and Rural Affairs Committee

The Environment, Food and Rural Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Environment, Food and Rural Affairs and its associated bodies.

Current membership Mr Michael Jack (Conservative, Fylde) (Chairman) Mr Geoffrey Cox (Conservative, Torridge & West Devon) Mr David Drew (Labour, Stroud) Mr James Gray (Conservative, North Wiltshire) Patrick Hall (Labour, Bedford) Lynne Jones (Labour, Birmingham, Selly Oak) David Lepper (Labour, Brighton Pavilion) Miss Anne McIntosh (Conservative, Vale of York) Mr Dan Rogerson (Liberal Democrat, North Cornwall) Sir Peter Soulsby (Labour, Leicester South) Dr Gavin Strang (Labour, Edinburgh East) David Taylor (Labour, North West Leicestershire) Paddy Tipping (Labour, Sherwood) Mr Roger Williams (Liberal Democrat, Brecon & Radnorshire)

Daniel Kawczynski (Conservative, Shrewsbury & Atcham), Mrs Madeleine Moon (Labour, Bridgend) and Mr Jamie Reed (Labour, Copeland) were members of the Committee during this inquiry.

Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk.

Publications The reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/efracom

Committee staff The current staff of the Committee are Chris Stanton (Clerk), Nerys Welfoot (Second Clerk), Sarah Coe (Committee Specialist—Environment), Marek Kubala and Joanna Dodd (Inquiry Managers), Andy Boyd and Briony Potts (Committee Assistants) and Mandy Sullivan (Secretary).

Contacts All correspondence should be addressed to the Clerk of the Environment, Food and Rural Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5774; the Committee’s e-mail address is: [email protected]. Media inquiries should be addressed to Laura Kibby on 020 7219 0718.

List of witnesses

Wednesday 18 July 2007 Page

Ms Helen Ghosh, Permanent Secretary and Mr Stephen Park, Interim Finance Director, Department for Environment, Food and Rural Affairs Ev 21

Tuesday 23 October 2007

Rt Hon Hilary Benn MP, Secretary of State, Department for Environment, Food and Rural Affairs Ev 81

Wednesday 21 November 2007

Ms Helen Ghosh, Permanent Secretary, Department for Environment, Food and Rural Affairs Ev 96

Wednesday 30 April 2008

Ms Helen Ghosh, Permanent Secretary, Mr Bill Stow, Director General for Strategy Evidence Group and Mr Stephen Park Interim Director, General Finance, Department for Environment, Food and Rural Affairs Ev 110

List of written evidence

Department for Environment, Food and Rural Affairs Evs 1, 36, 71, 108, 129

List of unprinted evidence

The following memoranda have been reported to the House, but to save printing costs they have not been printed and copies have been placed in the House of Commons Library, where they may be inspected by Members. Other copies are in the Parliamentary Archives, and are available to the public for inspection. Requests for inspection should be addressed to The Parliamentary Archives, Houses of Parliament, London SW1A 0PW (tel. 020 7219 3074). Opening hours are from 9.30 am to 5.00 pm on Mondays to Fridays.

Department for Environment, Food and Rural Affairs – Annexes energywatch – Background paper Environmental Services Association – Background paper

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Environment, Food and Rural Affairs Committee: Evidence Ev 1 Oral evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 18 July 2007

Members present:

Mr Michael Jack, in the Chair

Mr David Drew Dan Rogerson Mr James Gray Sir Peter Soulsby Lynne Jones Mr Roger Williams Mrs Madeline Moon

Memorandum submitted by the Department for Environment, Food and Rural AVairs

DEFRA’S 2007 DEPARTMENTAL ANNUAL REPORT

RESPONSE TO THE EFRA COMMITTEE’S PRELIMINARY QUESTIONS (PART ONE)

Capability Review

1. Could the Department provide copies of the action plans under which it is taking forward the recommendations of the Capability Review (CR)? The Renew Defra plans are enclosed.1 They highlight the activities relating to the Capability Review.

2. How is the Department addressing the four ‘urgent development areas’ identified in the CR (ignite passion, pace and drive; take responsibility for leading delivery and change; plan, resource and prioritise; and manage performance)? In particular: — What resources has the Department allocated to responding to the challenges set out in the CR? Action to respond to the Capability Review is embedded within the Renew Defra Programme, an ambitious change Programme aimed at transforming the way Defra operates, creating a department where people and resources can be moved quickly and flexibly and work is undertaken more collaboratively and eYciently. The response to the four urgent delivery areas is found in the programme plans. A budget of £10m has been allocated for the Financial Year 2007-08, though we will be looking to spend well within that headroom. An OGC Gateway 0 Review recently carried out reached the following conclusions: “This challenging business transformation programme seems to us to have the potential for achieving successful outcomes where previous attempts have failed. The programme’s strengths include inspired leadership from the top (with the Permanent Secretary as SRO), an excellent Programme Director, some excellent programme staV and considerable support from staV in core Defra. Some particular examples of good practice we have found are: — the cracking pace which has been set for the programme, including a projected end-date; — the bringing together of a wide range of Departmental and wider Government initiatives into a single transformation programme; — the distillation of a wide spectrum of transformation activity into five coherent workstream areas; — the emphasis on high performance; and

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— the emphasis on ﬂexibility in staV deployments. Although the challenges which lie ahead are clearly considerable, the programme seems to us well- paced to deal with them. The greatest immediate challenge is to deliver the headcount reduction target set for 31 March 2008, with further reductions in the following six months. No less important for the Department will be delivery of the other programme objectives on a basis that will be sustained. As the Programme Team recognise, early and visible progress will be needed on these so as to sustain momentum and meet the exacting programme timetable. Renew must not be seen as essentially a headcount reduction exercise”. A full copy of the report is enclosed (Appendix C to the report summarises the recommendations).2

What has been done to strengthen the Board, especially its ability to prioritise? Over the past year, four new executive Board members have been appointed (and a new Chief Scientific Adviser will be arriving in the Autumn). The new appointees are the DG Solicitor, the DG Climate Change, the DG Natural Environment, and the Finance Director. (The latter is currently a highly experienced Interim, who will be with us until the end of this financial year, in which time we will appoint a permanent replacement). The new DGs come with a range of highly relevant experience from other Government departments, and two have been members of the Cabinet OYce’s highly regarded High Potential Development Scheme. We have also redefined and reallocated the roles of existing DGs to give a greater focus to the work of the Board. In particular, the creation of a new DG for the Strategy and Evidence Group enables us to pull together our strategy and business planning activities more eVectively. Additionally, we have appointed two new Non-Executive Directors: — Janet Grossman—she is Operations Director at the Pensions Service in DWP and has experience of leading organisations through significant periods of modernisation and change. Janet brings to Defra her operational expertise in large scale transformation and service delivery in the public and private sectors. — Poul Christensen—Deputy Chair of Natural England, a farmer and business man, who will bring both his experience as a customer and as a Board member of one of our key NDPBs. The development areas that were highlighted in the Capability Review have led the Management Board of Defra to embark on a Board Development Programme. This includes a range of activities to improve the eVectiveness of our formal and informal meetings, and to identify the collective and individual development areas for the Board through 360 degree feedback.

How is the Department responding to the concerns regarding the pace of Defra’s operations and its understanding of business? Have Key Performance Indicators (KPIs) been formulated to incentivise the right behaviour in this respect? The Capability Review did not criticise the overall pace of our delivery operations (indeed it was not looking at the performance of individual delivery bodies). It was concerned that the Renew Defra programme should be delivered at a pace—as the Gateway Review has conﬁrmed that it will be. One of the strands of the Strategy Refresh work we did last year was to look at our relationships with the business community and on how we could better engage them across the range of our policy responsibilities. That work will now be taken forward by a newly appointed Customer Focus and Better Regulation Director. As part of developing our new policy process we will be looking to ensure much greater involvement of delivery agents early on in policy making. Our new business planning and corporate performance management processes will also be rolled out to cover key delivery partners so that the Management Board and Ministers have a clear view of performance across Defra’s key business areas.

What action is Defra taking to achieve the new Investors in People (IiP) standard? In May 2006 Defra completed a full IiP review against the new version of the Standard. The assessor concluded that the Standard was not fully met and, as a result, an action plan was developed. The action plan was endorsed by the Capability Quality Limited (CQL) Recognition Panel and Defra is currently in the middle of a 2-year period of Retaining Recognition.

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Environment, Food and Rural Affairs Committee: Evidence Ev 3

In February 2007, Defra opted to undertake a further progress review. The conclusion of the assessor at this time was that some progress had been made since May 2006; however, more time was required to embed changes into working practice, in particular to improve our induction processes and planning and evaluation of staV learning and development. In May 2007 a revised action plan was prepared by Defra and submitted to the CQL Recognition Panel proposing that Defra should remain in Retaining Recognition with a further and ﬁnal review in May 2008.

How is the Department improving its financial management capability? We have: — appointed a new (Interim) Finance Director; — revised our Financial Control Framework to provide the basis for improved financial discipline and control; and — ensured that all Board members understand the financial context in which we operate, by holding a financial management seminar. We will: — devolve budget management to Director level (rather than Director General level), providing closer control and management of funds. This will be supported by improved financial management reporting; — continue to develop and strengthen existing arrangements for Management Board review and consideration of financial issues, including the development of compliance and exception reports in support of the existing variance analysis reports. We are also implementing, or strengthening, the processes: i. to control Headcount, in particular though payroll modelling and monitoring, and by accelerating exits under the Renew programme; ii. to control Capital Expenditures through enhanced governance arrangements, building on proposals outlined in the Comprehensive Spending Review Asset Management Strategy, and with early emphasis on reviews of IT spend; iii. to constrain all discretionary spend pending resolution of balanced budgets; iv. to improve Performance Management for personnel, Core Defra operations and our Delivery Bodies; v. to improve Business Planning through integration with a devolved project approvals process and a more outcome focused resource allocation exercise; vi. to review Balance Sheets, and in particular to ensure that no asset impairments will be carried forward into 2008/09; and vii. to reduce costs through additional procurement eYciencies. We have also taken steps to improve, and will continue to strengthen, our annual Business Planning exercises. Changes will in particular ensure more explicit consideration of, and reconciliation to, all Treasury Budget Control totals as a paramount feature of that work. We will also bring forward the date by which budget allocations will be set (to reflect those totals) each year, so that these are reconciled and loaded into our systems and COINS before the start of the financial year. In the longer-term, we will continue with work to integrate and improve our systems and processes for financial control and forecasting.

Financial Management

Main Estimate 2006–07 and 2007–08

3. Could the Department provide a breakdown of the Departmental Expenditure Limits (both voted and non- voted) for 2007–08. This breakdown should include: — a monthly planned profile of expenditure by Estimate sub-heads; — a separate monthly profile for Administration expenditure; — a narrative explaining the key risks which the Department has identified to the budgets in 2007–08. Budgets for 2007–08 were agreed and loaded on Defra’s accounting system and the shared database with HM Treasury (COINS—Consolidated On-line Information System) when budgets for 2006–07 and 2007–08 were agreed in 2006. However, these are currently under review to reflect the latest outlook for the year and, more fundamentally, to align budgets to the new organisational structure that has emerged from the Renew Defra programme. Profiles to the level of detail as requested will be made available to the committee as soon as possible. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 4 Environment, Food and Rural Affairs Committee: Evidence

In terms of risks identified to the 2007–08 budget, the primary risk is, as always, the capacity of Defra’s finite DEL budget to cope with continuing demands and unforeseen circumstances, as the recent exceptional flooding incidents demonstrated. An added risk this year, is the Department’s ability to reduce its Administration costs in line with the targeted headcount reductions, as there is a systemic time-lag between the release of staV and the resultant savings to Administration costs. The Permanent Secretary will be able to update the Committee at the hearing on 18th July.

4. Could the Department provide the ﬁnal outturn for 2006–07, proﬁled in a similar way to the 2007–08 Departmental Expenditure Limit requested above.

The final outturn figures for 2006-07 will only be available once the resource accounts are certified. We will share these figures with the committee as soon as possible.

Defra’s apparent capital over-spend in 2006–07

Page 171 of the Departmental Report 2007 states: The estimated capital out-turn for 2006–07 is more than the budget made available in the Spring Supplementary Estimate. The transfer of capital grants from resource to capital increased pressure in this area, coupled with uncertainty around a number of programmes.

5. Why did the (a) transfer of grants from resource to capital and (b) uncertainty on programme numbers create an expected capital over-spend in 2006–07?

The Resource Budgeting Guidance 2006–07 introduced a distinction between current and capital grants which did not exist in prior years. In a handful of programmes it has not been easy to distinguish in advance whether certain work should be categorised as current or capital under this change, and this will continue to be the case.

6. Why was the over-spend not identiﬁed in time for provision to be made available in the Spring Supplementary Estimate 2006–07?

This was a technical change that did not materially aVect the overall DEL outturn and the Environment Agency contained its costs within (or close to) overall budget. Under Flood Protection, the Environment Agency undertakes a range of work, some of which is classified as capital works expensed in year (and similarly the treatment of capital grants, to distinguish it from the creation of a tangible fixed asset to be depreciated in future years). It was only on reviewing the range of flood protection work undertaken in the run up to year-end that the Agency was able to identify that a larger proportion of works should have been categorised as capital work expensed in year rather than current expenditure. The change in categorisation from current to capital was on-going and not completed until March, too late to have been incorporated in the Spring Supplementary Estimate for 2006–07. The re-categorisation was also under review by the NAO at the time and has been concluded to their satisfaction.

7. Do the latest out-turn ﬁgures conﬁrm an over-spend on capital?

Yes. The level of overspend on Capital DEL was £38.215m.

RPA disallowance provision and Resource Accounts

Defra’s 2005–06 Resource Accounts were supposed to have been laid before the summer recess of 2006; instead the accounts were laid in November that year. The Department again is supposed to provide this year’s Resource Accounts before the summer recess.

8. When does the Department expect to publish its Resource Accounts for 2006–07?

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Environment, Food and Rural Affairs Committee: Evidence Ev 5

9. What is the agreed Rural Payments Agency provision on the 2006–07 balance sheet (if now agreed with the National Audit OYce)? — How does this amount break down into the disallowances expected for each of the relevant financial years? — What levels of disallowance have been provided for in each of the financial years? — What progress has been made with the European Union on agreeing the final disallowed amounts for each of the relevant financial years? The provision for disallowance in the 2006–07 resource accounts is still being audited by NAO and so the figures given below have yet to be agreed. The total proposed provisions are £344.9m of which £150.2m was provided in 2005–06 and £194.7m in 2006–07.The provision is for potential disallowance in respect of SPS 2005, SPS 2006, other CAP schemes and also an amount for CAP scheme payments made by the devolved administrations. The European Commission have not yet made any proposals in regard to potential disallowance for either SPS 2005 or SPS 2006, but they have done so in regard to some of the other schemes for which provision has been made. Should any proposals be made, the Government will continue to defend the UK’s interests with the aim of ensuring that any proposals are minimised to the fullest possible degree; indeed one EC proposal is being contested at the Conciliation Body in July. In addition to the provisions, accruals of £73.5m (£17.4 in 2005–06 and £56.1m in 2006–07) have been made in respect of disallowance for the Fruit and Vegetable Operational Programmes and late payment penalties for SPS 2005 to 31 March 2007.

10. What is the ﬁnancial position of the contingent liability, in relation to the Rural Payments Agency, at the end of 2006–07? Contingent liabilities of £113.8m are in respect of potential additional late payment penalties for SPS 2005 and potential increased disallowance for SPS 2005 and SPS 2006. These are also still subject to audit.

Comprehensive Spending Review 2007 and new PSA targets

11. How are the CSR 07 negotiations progressing with Treasury? Are you anticipating or have you agreed any reductions in resources for the CSR 07 period from 2007–08 levels? Negotiations with Treasury on the Department’s Comprehensive Spending Review 2007 settlement are progressing well, but are ongoing. Our assumption is that the details will be announced in the Autumn. The Department has previously provided the Committee with drafts of its two PSA targets for the CSR 07 period: ﬁrst, in its Response to the Committee’s report on Defra’s Departmental Report 2006 and, second, during the Committee’s visit to Nobel House on 15 May 2007 to discuss the Capability Review with Defra oYcials.

12. Could the Department provide the latest draft of its new PSA targets? What progress has been made in developing indicators for the targets? The new Defra led PSAs will be ﬁnalised as part of the CSR. Defra is working hard with other departments to ensure they cover the full range of action across government to address issues of climate change and protecting and enhancing the natural environment, including developing an eVective suite of indicators to monitor progress towards delivering the PSAs.

PSA Targets

PSA Target 1: Promoting sustainable development Public Service Agreement target 1: Promoting sustainable development To promote sustainable development across Government and in the UK and internationally, as measured by: — the achievement of positive trends in the Government’s headline indicators of sustainable development; — the UK’s progress towards delivering the World Summit on Sustainable Development commitments, notably in the areas of sustainable consumption and production, chemicals, biodiversity, oceans, ﬁsheries and agriculture; and — progress towards internationally agreed commitments to tackle climate change. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 6 Environment, Food and Rural Affairs Committee: Evidence

In evidence to the Committee in 2006, the Department provided data on the measures used for PSA target 1 broken down by priority area (Second Report of Session 2006–07, Defra’s Departmental Report 2006 and Defra’s budget, HC 132, Ev 8).

13. Could the Department provide data on the measures used for PSA target 1 (Sustainable Development) broken down by priority area? Summaries of sustainable development indicators (as presented in Sustainable Development Indicators in Your Pocket 2006)

All Indicators

Changes in sustainable development measures since 1990 and 1999

Changes in measures Changes in measures since 1990 since 1999 7 31 17

24 16

9 Showing improvement Showing deteriation

Showing little or no change Insufficient data

(based on 101 of 127 measures, comprising 68 indicators) Compared with the position in 1999, 53 measures show improvement (representing over half of those for which it is possible to make an assessment), and 24 show little or no change. A wide range of measures show improvement including renewable electricity, emissions of air pollutants, manufacturing, service and public sector emissions, waste recycling, agricultural emissions and land stewardship, biodiversity loss, river water quality, land recycling, community participation, vehicle crime and burglary, fear of crime, poverty measures, mortality rates, road accidents, housing conditions and fuel poverty, rough sleepers and local environmental quality. Those measures showing deterioration since 1999 are speciﬁcally: — aviation emissions of greenhouse gases; — fossil fuels used for electricity generation; — nitrogen oxide emissions from electricity generation; — carbon dioxide emissions from: — households; — private vehicles; and — road freight; — energy supply (consumption exceeding UK production); — water loss through leakages; — household waste arisings; — extent of sensitive areas aVected by excessive nitrogen from air pollution; — robbery; — infant mortality gap (between highest & lowest rates); — childhood obesity; Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 7

— walking and cycling; — children walking to school; — ozone pollution in urban areas; and — households living in temporary accommodation.

Sustainable Consumption and Production

Changes in sustainable development measures since 1990 and 1999

Changes in measures Changes in measures since 1990 since 1999 3 1

20 18

1 5

Showing improvement Showing deteriation

Showing little or no change Insufficient data

(based on 30 of 49 measures, comprising 25 indicators) Indicators for sustainable consumption and production mainly cover emissions, resource use and waste. Eighteen measures (over half) show improvement compared with 1999. Those showing improvement include emissions of air pollutants, manufacturing, service and public sector emissions, waste recycling, agricultural emissions, river water quality, and land recycling. Measures showing deterioration since 1999 are greenhouse gases from aviation, carbon dioxide emissions from households, private vehicles and road freight, water leakage and household waste arisings. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Climate Change

Changes in sustainable development measures since 1990 and 1999

Changes in measures Changes in measures since 1990 since 1999

7 7 8

Showing improvement Showing deteriation

Showing little or no change Insufficient data

(based on 14 of 23 measures, comprising 14 indicators) (based on 14 of 23 measures, comprising 14 indicators) Indicators for climate change and energy mainly cover greenhouse gas emissions, electricity generation and energy supply. Seven measures show improvement since 1999 and seven show deterioration. Those showing improvement since 1999 include renewable electricity, sulphur dioxide emissions from electricity generation, carbon dioxide emissions from manufacturing, service and private sectors, and methane from agriculture. Those showing deterioration include aviation emissions of greenhouse gases, energy supply, nitrogen oxide emissions from electricity generation and carbon dioxide emissions from households, private vehicles and road freight. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 9

Protecting our Natural Resources and Enhancing the Environment Changes in sustainable development measures since 1990 and 1999

Changes in measures Changes in measures since 1990 since 1999 4

1 15 12

1 4

Showing improvement Showing deteriation

Showing little or no change Insufficient data

(based on 24 of 29 measures, comprising 15 indicators) Indicators for natural resources protection mainly cover wildlife and biodiversity, farming, land use, ﬁsh stocks, air pollution and rivers. Fifteen measures show improvement since 1999 and one deterioration. Those showing improvement since 1999 include biodiversity loss, farming management and emissions, land recycling, air pollution, the impact of acidiﬁcation from air pollution and river water quality. Bird populations show little change. The extent of sensitive areas aVected by excessive nitrogen from air pollution increased, representing a deterioration.

Sustainable Communities Changes in sustainable development measures since 1990 and 1999

Changes in measures Changes in measures since 1990 since 1999 4

22 7

18 26

15 5 7 Showing improvement Showing deteriation

Showing little or no change Insufficient data

(based on 52 of 68 measures, comprising 39 indicators) Indicators for creating sustainable communities mainly cover poverty, health, crime, access, mobility, and local and domestic environments. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Twenty-six measures (over half of those for which there are data) show improvement since 1999, 15 show little or no change, and seven show a deterioration. Those showing improvement include poverty and housing conditions, educational attainment, employment, vehicle crimes, burglary, fear of crime, mortality rates, airborne particulate pollution, and deaths and injuries caused by road accidents. Those showing deterioration include robbery, the gap in infant mortality rates between socio-economic groups, child obesity, walking and cycling and ozone pollution in urban areas. Sustainable Development Indicator traYc light assessments (as presented in Sustainable Development Indicators in Your Pocket 2006. Updates to all the indicators will be published in Sustainable Development Indicators in Your Pocket 2007 on 31 July, after which time it will be possible to provide the Committee with an updated summary of the indicator assessments.)

Number of indicator measure “traVc light” assessments in PSA1 reporting

Priority area Sustainable Protecting our Creating Total(1) consumption & Climate change natural sustainable production & energy resources communities from 1990 from 1999 from 1990 from 1999 from 1990 from 1999 from 1990 from 1999 from 1990 from 1999

Red: clear deterioration 665711771617 Amber: little or no change 151034515924 Green: clear improvement 20 18 8 7 12 15 18 26 45 53 InsuYcient data or measures to be developed 310084224317 Total measures in PSA1 reporting 30 30 14 14 24 24 52 52 101 101 Measures not used for PSA1 reporting (2) 1919995516162626 Total measures in Strategy reporting 49 49 23 23 29 29 68 68 127 127

(1) Some indicator measures support reporting for more that one priority area. The total is the number of distinct measures excluding this multiple reporting. (2) Some indicators in the Strategy are for contextual reporting only, in addition some indicator measures are excluded from PSA1 reporting in an attempt to avoid “double-counting”, ie, where the measure is used directly as a component in more that one indicator or trends are strongly inﬂuenced by or directly reﬂect other measures.

PSA Target 2: Reducing greenhouse gas emissions Public Service Agreement target 2: Reducing greenhouse gas emissions To reduce greenhouse gas emissions to 12.5% below 1990 levels in line with our Kyoto commitment and move towards a 20% reduction in carbon dioxide emissions below 1990 levels by 2010 through measures including energy eYciency and renewables. A joint target with the Department of Trade and Industry and the Department for Transport.

14. What were the Year Two results of the EU Emissions Trading Scheme (ETS) published in April, and what do they indicate about the eVectiveness of the scheme? The results of the second year of the EU Emissions Trading Scheme (EU ETS), which sets a cap on total carbon dioxide (CO2) emissions from European industries, were released in April this year. UK sites covered by the scheme emitted 251.1 million tonnes of carbon dioxide (MtCO2) in 2006, an increase of 8.8MtCO2, or 3.6%, from 2005. The total UK cap for 2006 was 217.3MtCO2, meaning that 33.8 MtCO2 were purchased through emissions trading to keep within the overall cap. The results also show that in 2006, UK installations were 100% compliant with the scheme’s requirements to report emissions and surrender an equal number of allowances. This outstanding result reflects the eVort made by operators, verifiers and regulators in meeting the mandatory deadlines and the prompt enforcement action taken by the regulators against those who were non-compliant in 2005. The scheme’s first two years have provided a solid base to build on for the future. The trading mechanism is viable and the institutional framework sound. However it is important to remember that emissions trading had never been tried before on this scale. Phase I has always been a learning by doing exercise. And we’ve learned key lessons that will improve the eVectiveness of the EU ETS. The 2006 results across the EU show that other Member States had more allowances than needed to cover their emissions. There is a crucial need for realistic but tough caps to be set consistently across the EU for future phases. Market scarcity will drive the carbon price to encourage industry to deliver real emissions reductions and help to meet the EU’s Kyoto commitments. We are greatly encouraged by the Commission’s decisions on Member States’ Phase II (2008–12) National Allocation Plans, which show a clear determination to ensure real scarcity in the carbon market and to use the ETS to drive down carbon dioxide emissions in line with the EU’s Kyoto targets. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 11

PSA Target 3(a): Reversing the decline in the number of farmland birds Public Service Agreement target 3a: Reversing the long-term decline in the number of farmland birds Care for our natural heritage, make the countryside attractive and enjoyable for all and preserve biological diversity by reversing the long term decline in the number of farmland birds by 2020, as measured annually against underlying trends. Page 51 of the Departmental Report states that the following three factors indicate the Department is “on course to meet the farmland birds target”: The rate of decline of Farmland Birds Index will slow in the period to 2009; The Farmland Birds Index will become stable during the period 2009 to 2014; and The Farmland Bird Index will start to increase in 2014 to 2020.

15. Can the Department provide further evidence to support the statistical confidence of the trends observed in relation to PSA Target 3 on Farmland Birds (Departmental Report, p 51) Research completed in 2001 by the British Trust for Ornithology and the RSPB produced an agreed methodology to measure the annual underlying trends in populations (BTO Research Report No. 251). The methodology enables the production of a smoothed indicator together with statistical confidence intervals using bootstrapping techniques showing the long-term trends by combining the 19 individual species indices (Rooks were added in 2004). In this way the eVects of any short-term fluctuations due to weather or special factors aVecting one or two species are reduced. This methodology is fully supported by HM Treasury and the National Audit OYce.

What is the Department planning to spend on its Entry Level and Higher Level Environmental Stewardship schemes over the CSR 07 period? Spending under Environmental Stewardship during the CSR07 period will be dependent upon Defra’s ﬁnal CSR settlement and formal European Commission approval of our recently submitted new Rural Development Programme. Until we know the ﬁnal position on both, we can only provide indicative budgets for Environmental Stewardship which may be subject to change. Subject to those caveats, over the CSR period we are currently planning to spend £560 million on ELS/OELS and £164 million on Higher Level Stewardship.

PSA Target 3(b): Sites of Special Scientiﬁc Interest Public Service Agreement target 3b: Sites of Special Scientiﬁc Interest Care for our natural heritage, make the countryside attractive and enjoyable for all and preserve biological diversity by bringing into favourable condition 95% of all nationally important wildlife sites by 2010. In the 2006 Departmental Report, this measure was “on course”. This year’s Departmental Report shows there has been some “slippage”, with 75.4% of SSSI in favourable condition in March 2007 as opposed to the target for that date of 78%. Page 53 of the Departmental Report states that “it will be possible to recover this year’s slippage [with the SSSI target] before 2010”. The Departmental Report also states that Natural England has developed a new on-line reporting system that “allows major stakeholders to view live data regarding their own remedies”. The system will “reduce the risk of slippage in future years”.

16. What is the revised trajectory for the remaining years of the SSSI target? We have not considered it necessary to revise the trajectory for the remaining years of the SSSI target. The trajectory was informed by a model developed by English Nature, which estimated the amount of SSSI land which could be delivered into target condition each year. Since then, continuing improving data and analysis have confirmed the trajectory remains achievable in broad terms. The trajectory represents progress towards the target of 95% through incremental annual milestones of 5 or 6%. The milestones have been achieved every year until 2007, when there was slippage of 2.6% against the 78% milestone. This occurred for a number of reasons, the most significant of which were major organisational change associated with the creation of Natural England (NE), the short-term financial moratorium introduced by NE, and under-delivery by a number of the major SSSI landowning or managing bodies. The SSSI Programme Board (comprising representatives from Defra, NE and the Environment Agency) continues to focus on achieving the 2008 milestone of 83%. The Board is confident that if all partners deliver their commitments, the area of SSSIs in target condition by the end of March 2008 will be close to 83%, and that the 2010 Target of 95% remains achievable. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 12 Environment, Food and Rural Affairs Committee: Evidence

17. How will Natural England’s new on-line reporting system aid achievement of the target? NE’s new on-line reporting system enables delivery partners to access NE’s SSSI information database (ENSIS). ENSIS contains data on the condition of all SSSIs and the online system enables NE and partners to run reports in order to plan delivery and track progress. For all SSSIs in unfavourable condition, ENSIS lists the causes of unfavourable condition, the actions required to deliver favourable recovering condition (otherwise known as “remedies”), the party responsible for action, and a date for implementation. Major delivery partners have been working with NE to ensure that the ENSIS database is up to date and accurately reﬂects their planned delivery of remedies. This data enables NE, Defra and other partners to plan and prioritise eVectively in order to ensure year on year progress towards the PSA target. It will also allow the SSSI Programme Board to monitor progress against predicted delivery throughout the year and to address any problems that occur.

PSA 4: Enhancing opportunity in rural England Public Service Agreement target 4: Enhancing opportunity in rural England Reduce the gap in productivity between the least well performing quartile of rural areas and the English Median in 2008 demonstrating progress by 2006 and improve the accessibility of services for people in rural areas. In order to deliver on the “access to services in rural areas” aspect of this target, the Department has identiﬁed ﬁve main themes where improvements are a priority (health, education and skills, work and pensions, transport and housing). Delivery on targets in these areas will require joint working with other Departments.

18. Has the Department formulated joint plans with the relevant lead departments in order to deliver on its ﬁve priority areas relating to access to services in rural areas (PSA Target 4)? If so, could the Department provide these to the Committee?

Assessing progress against this target has continued to present many challenges. We have had diYculty deciding upon meaningful, measurable measures which could then be agreed with other departments with which the policy lead rested, and thus delivery plans. At the time that the SR04 round was concluded, cross- Whitehall discussions indicated that it would be possible to apply the rural definition, (then in development), to a range of key indicators. However, diYculties with the availability of baseline data and the time lag associated with national data sets have continued to hamper progress. Not least amongst these diYculties was a mismatch between the geographies at which certain key national data was being collected and the geographies at which the rural definition or classification could be applied. These challenges can lead to a tendency to focus on those targets which can be measured. However, these may not reflect the reality of needs in rural areas. We have had more success in the development of the wider rural evidence base. We now have a reasonably robust rural definition that allows us to map the rural “position” across a range of datasets, such as demography, employment, skills, etc.

Looking Forward Defra is currently seeking to work closely with departments across Whitehall to ensure that delivery plans for the proposed PSA set are rural proofed eVectually. We are putting agreements in place with other Government Departments, subject to decisions in the up coming spending review. The aim is to embed the rural dimension at a much earlier stage in the process than was the case in the previous spending round. Building on the evidence that we have gathered over this spending period, Defra has developed a much clearer approach to mainstreaming rural policy. Central to this is the move from a, potentially crude, top- down focus on inputs and processes at the national level to a more sophisticated local focus on local outcomes. For example, our support for third sector organisations, especially Rural Community Councils, has helped those organisations to take up opportunities to represent rural community interests in the development of Local Area Agreements. Another example is the new Planning Policy Statement 3 (PPS3), which places greater emphasis on the need for local planning decisions to address rural housing needs. This work will be supported by the Commission for Rural Communities (CRC), established by the Natural Environment and Rural Communities Act 2006. The CRC acts as an independent rural adviser, advocate and watchdog, with a particular focus on social disadvantage and economic underperformance. It is expected to advise and challenge the Government and delivery bodies at all levels to improve performance and entrench best practice and has a key role in supporting partners across the public sector to consider rural needs and the development of their policies. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 13

PSA 5: Sustainable farming and food Public Service Agreement target 5: Sustainable farming and food Deliver more customer focussed, competitive and sustainable farming and food industries and secure further progress via CAP and WTO negotiations in reducing CAP trade-distorting support. The 2006 Departmental Report reported this target as being “on course”, but slippage was reported in the 2006 Autumn Performance Report. The 2007 Departmental Report reports performance as being back “on course”.

19. What explains the fall and subsequent rise in performance in relation to PSA 5 (Sustainable Farming and Food) during the past year?

— What new data support the current assessment that performance is now back “on course”? The fall in the GVA indicator in 2004 and 2005 will have been due to a complex range of factors which it is diYcult to separate out. One significant contributor is the fact that the long term fall in farm labour in the EU14 continued period whereas in the UK the total labour remained fairly constant. In addition, there will be eVects from varying crop harvests across Europe (in particular with continental Europe recovering from the drought aVected harvest in 2003) and a level of volatility due to the way in which the range of commodity price movements impacts diVerently in the UK compared with the EU14. This is because of the diVerent mix of agricultural production between the two. The rise in performance in 2006 is similarly a result of several factors. One important contributor is the ending of the OTMS and the resumption of older cattle entering the food chain (with the result that these cattle now count as part of output and contribute to GVA). The resumption of beef exports will have also helped firm UK cattle prices as domestic production increased. Other contributions to the overall increase are an increase in value added activities on farm and in diversification more generally (some of these are funded through the ERDP); increased farmer collaboration (between farmers and vertically through the food chain);increase in farmer skills/business competence; increase in benchmarking; increase in proportion of production sold under assurance schemes. The overall assessment of “on course” is made taking the following into account: — focus is on the wider outcome of competitive farming rather than the GVA indicator specifically; — it is in the context of the overall direction of travel of the measure, treating the trajectory as a broad guide and not a specific series of interim targets; and — it takes into account the impacts that are starting to feed through from delivery of a range of policies, as outlined above.

PSA 6: Waste and recycling Public Service Agreement target 6: Waste and recycling To enable at least 25% of household waste to be recycled or composted by 2005–06, with further improvement by 2008. The Department has already met the ﬁrst part of this target, to enable at least 25% of household waste to be recycled or composted by 2005–06. Page 41 of the Departmental Report says that, in order to meet the second part of the target—to achieve “further improvement by 2008”—all local authorities must meet a minimum level of 20% recycling/composting in 2007–08. Page 41 of the Departmental Report states that most funding in this area is provided by the local authority Environment, Protective and Cultural Services (EPCS) block.

20. What action has the Department taken to achieve the second part of PSA target 6 (Waste and recycling), given that funding is channelled through local authorities?

— To what extent do current levels of Environment, Protective and Cultural Services (EPCS) funding meet the additional costs incurred by local authorities in delivering on this target? On a point of clariﬁcation: The criterion for achieving the second part of PSA 6 is an increase in the national recycling rate. The statutory performance standards for recycling and composting in 2007–08 for all local authorities will be equal to the level of their targets in 2005–06. The exception is those local authorities with a target of 18% in 2005–06. These are required to raise their performance to 20%. This will help achievement of the national target but is not the criterion for success. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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The Government looks at all pressures, including waste, on local government when setting the overall level of funding for local authorities. Considerable investment has been made in local government; an increase in overall grant to councils of 39% in real terms up to 2007–08. Defra also provides other support to local authorities—primarily through the work of the Waste and Resources Action Programme (WRAP). WRAP run a variety of workstreams including: — the Recycle Now campaign, which seeks to inﬂuence public behaviour and the home composting programme providing support to local authorities — the home composting programme, which provides support to local authorities on the running of local home composting campaigns and through the provision of reduced price composting bins — the ROTATE programme, which oVers guidance and toolkits for local authorities on doorstep collection systems for recyclates.

PSA 7: Eliminate Fuel Poverty Public Service Agreement target 7: Eliminate Fuel Poverty Eliminate fuel poverty in vulnerable households in England by 2010 in line with the Government’s Fuel Poverty Strategy Objective. Joint target with the Department for Trade and Industry. The latest data presented in the Departmental Report (p 20) was for 2004, published in June 2006.

21. Can the Department provide data from 2005 for PSA target 7 (fuel poverty) Fuel Poverty figures are calculated using English House Condition Survey data, for which there is a two year lag in collation. The latest published information is for 2004, with calculations for fuel poverty in 2005 underway and to be published shortly in our Fifth Annual Fuel Poverty Progress Report. In 2004 fuel poverty had fallen, In England, from 5.1m in 1996 to 1.2m, of which 1m were vulnerable. However since 2004, as indicated in graph 1, fuel poverty is estimated to have increased principally due to the significant rises in fuel prices. Between 2004 and 2006 it is estimated that vulnerable households in fuel poverty have doubled to two million in England, with comparable rises in the devolved administrations. However assuming current activity levels in tackling fuel poverty and following the scenario currently most reflective of future fuel prices, fuel poverty is estimated to reduce to around 1.5 million in 2010 and 700,000 in 2016.

Graph 1

REPRESENTATION OF VULNERABLE FUEL POOR HOUSEHOLDS IN ENGLAND FROM 1996

FIGURES FOR 2005 ONWARDS ARE ESTIMATED 6

Central 3 High Low

2 Number of households in fuel poverty (millions)

2004 level 1

0 1996 2001 2003 2005 2007 2009 2011 2013 2015 Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 15

22. Has there been evidence from interim indicators that recent fuel price decreases have helped performance in this target? Fuel poverty is driven by three elements, household energy eYciency, income and fuel prices. Historically the element having most impact on fuel poverty ﬁgures has been an increase in household income being responsible for 60% of the reduction in fuel poverty between 1996 and 2003. Energy eYciency and fuel prices for the same period were accountable for around 20% of the reduction each. Although recent reductions in fuel prices will have started to have a positive impact on the number of households in fuel poverty, it is too early to estimate the scale of impact. However calculations by DTI suggest that any percentage reduction in fuel prices reduces the number of households in fuel poverty by 40,000.

23. What has Defra done to influence other Government departments to ensure delivery on this target? As one of the two lead Departments on fuel poverty Defra has taken the lead in seeking to drive forward progress across all areas of Government. Ministers across Government have met to discuss the range of challenges which exist in tackling fuel poverty, recognising the need for and benefits from action across each of the influencers of fuel poverty. Alongside Defra and DTI, representatives from DWP, DH and CLG have been directly involved in discussions. This work is supported by an active programme of liaison between oYcials which has helped to take forward action and identify opportunities for joined up working. An example of this was highlighted in the Energy White Paper with work in hand for a cross Government campaign this winter to highlight the importance of keeping warm. We also chair a Management Board involving oYcials from DTI, DWP, DH, CLG and HMT all of whom have a direct interest in progress towards this target. The purpose of this group is to drive forward policies and practises that will more eVectively and eYciently deliver a reduction in fuel poverty.

PSA 8: Improving air quality Public Service Agreement target 8: Improving air quality Improve air quality by meeting the Air Quality Strategy targets for carbon monoxide, lead, nitrogen dioxide, particles, sulphur dioxide, benzene and 1,3 butadiene. Joint target with the Department for Transport. This target is described as “on course”, despite only some of the elements of the target being met. There does not seem to have been any improvement in the failing pollutants (nitrogen dioxide and particulates) for some years; identical wording has been used in this year’s Departmental Report as last year’s.

24. Why has PSA 8 (Air Quality) been reported as “on course” when only some elements of the target are being met? Our reports have also made it clear that while we anticipate meeting the majority of the seven pollutants and their 19 sub sets which comprise the Air Quality PSA and all the pollutants in the PSA target, in the majority of the country (currently up to 99.5% in some areas), we have also made it clear that we expect that meeting those for nitrogen dioxide and particles in all parts of the country will be extremely challenging— if not impossible in some cases. For example, modelling shows that even if every vehicle was taken oV London’s roads there would still be widespread exceedences of the NO2 objective because of high background levels. Therefore in reporting the PSA we have used HMT guidance which terms “on course” as indicating “progress in line with plans and expectations.” However, we recognise that this could have perhaps been better described as “broadly on course but with some elements of slippage”, if terminology had permitted.

PSA 9:Animal health Public Service Agreement target 9: Animal health To improve the health and welfare of animals, and protect society from the impact of animal diseases, through sharing the management of risk with industry, including: — a reduction of 40% in the prevalence of scrapie infection (from 0.33%–0.20% by 2010); — a reduction in the number of cases of BSE detected by both passive and active surveillance to less than 60 in 2006, with the disease being eradicated by 2010; and — a reduction in the number of Bovine TB to new parishes below the incremental trend of 17.5 conﬁrmed new incidents per annum by the end of 2008. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Page 76 of the Departmental Report notes “slippage” against the target for the reduction in incidence in BSE. Despite this, page 77 shows that there has been a decrease in resource in this area from £313 million in 2005–06 to an allocation of £169 million in 2006–07 to a planned allocation of £156 million in 2007–08.

25. Given that there has been “slippage” with the BSE reduction target, why has resource decreased in this area? Page 76 of the Departmental Report explains that the “slippage” against the 2006 target for the reduction in incidence in BSE (114 versus the target of 60), is largely due to an increase in the level of EU-required active surveillance in 2006, particularly in cattle born before the 1996 reinforced feed ban, and the longevity of this sub-population. This “slippage” should be considered in context of a 49% reduction in the incidence of all BSE cases, and a 41% reduction in the incidence of BSE cases born after the 1996 feed ban, from 2005 to 2006. Reduction targets based on incidence (ie number of BSE cases detected) are aVected by the level of surveillance in a population where the prevalence of disease (ie number of BSE infections per unit of population) remains constant. The mean incubation period for BSE is ﬁve years. The main control is the prohibition on the feeding of ruminant protein to ruminants which Defra will continue to enforce rigorously. Page 77 shows that the most signiﬁcant decrease in resource has been in relation to the Over Thirty Month Scheme (OTMS) and the Older Cattle Disposal Scheme (OCDS). There has also been “slippage” in achieving a 40% reduction in the prevalence of scrapie infection by 2010 (Departmental Report, p 75).

26. Why has there been slippage against the scrapie reduction target? Note: The explanatory text on page 75 of the report contained a link to information on the measurement of performance against PSA targets. That link is no longer active. The following is the up to date link: http://www.defra.gov.uk/corporate/busplan/spending- review/pdf/tn.pdf The principle means of attaining this target was expected to be the transition from voluntary NSP Ram Genotyping Scheme (RGS) to a compulsory scheme as required by EU legislation for all flocks of high genetic merit (eVectively most if not all breeding rams in Great Britain). Those EU rules would have required the compulsory slaughter of all rams identified as having the most scrapie susceptible genotypes (NSP Types 4-53). However in 2006 the EU Council and Parliament persuaded the EU Commission that compulsory genotyping may not be desirable. Member States subsequently supported the Commission’s proposal that scrapie genotyping should be both discretionary and voluntary (outside of known scrapie aVected flocks).

Efficiency Savings

Progress against targets Page 112 of the Departmental Report shows that the Department has now revised its headcount reduction target: its revised target is now 1,422 reductions by the end of 2008 as opposed to the initial target of 2,400. However, it is not clear from the Departmental Report whether the Treasury has accepted the revised headcount reduction target.

27. Has Treasury agreed the Department’s revised headcount reduction target? The Treasury has accepted the Department’s proposals on headcount set out under its “Renew” Programme.

— To what extent will the revised target have an impact on the Department’s ability to deliver its financial savings target? We are forecasting that in the SR04 period we will provide both a contingency against shortfalls in financial gains arising from under-delivery headcount reductions and that the Department will over-deliver by £65 million on the original SR04 target of £610 million. Additional gains will result from further reductions arising from the Renew Programme—these gains cannot be quantified until grades of staV and dates of departure have been finalised.

3 NSP genotypes table http://www.defra.gov.uk/animalh/bse/othertses/scrapie/nsp/pdf/genotypes.pdf Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 17

— Where will the additional resource be found within the organisation to cover the greater number of staV than anticipated under the SR 2004? Provision to cover these staV will be identiﬁed by each business area as part of the Department’s internal budget allocations for 2007–08.

28. How does the Department monitor the impact of eYciency savings on the quality of front-line services?

— Could the Department provide (a) results of recent customer satisfaction surveys and (b) the measures the Department uses to monitor its output levels and the results of these measures in recent years. Each initiative within the EYciency Portfolio has adopted appropriate metrics for assuring that quality and performance standards are not compromised in the generation of eYciency. Examples of the listed approaches are set out below: A selection of measures from the Environment Agency’s Corporate Balanced Scorecard are monitored. Examples include: — Delivery of flood risk management capital and revenue programme against plan. Feb-07 target £240.4 million, outturn £240.7 million. — Successfully influence flood plain development planning decisions. 2006–07 Quarter 4 target 638, outturn 682. — More rural land is covered by environmental agreements that protect soil and water. 2006–07 Quarter 4 target 43,866, outturn 64,633. — More houses are protected from flooding. 2006–07 Quarter 4 target 29,605, outturn 28,959. Front line delivery in Natural England, established by the Modernising Rural Delivery Programme is monitored using PSA target 3a. Details of which can be found on pages 52–54 of the Departmental Report. The return in 2006–07 on investment in professional procurement staV in the Procurement and Contracts Division was £26.50 for every £1 spent. Most of the agencies conduct an annual Customer Satisfaction Survey as a requirement of the ministerial targets set for them. The surveys are sent to a cross section of customers to get a representative view and a numerical scoring system is used to collate the responses. The results are then published in their annual reports. Overall they have achieved high scores in their Customer Satisfaction Survey’s. Eg CEFAS has reported that the overall customer satisfaction survey score will exceed 82%, CSL reported a score of 88% in their last published annual report, and VLA have reported a score of 80% in the last Customer Satisfaction Survey. In the 2007 Departmental Report all the agencies reported that they had either achieved or were on target to meet their performance objectives.

Verification of reported eYciency savings Treasury’s Departmental Report guidance (PES 06/18 December 2006) stated that departments’ reported eYciency gains should be clear in “defining how gains claimed in previous years have been audited, and outlining the auditors’ conclusions”. Similarly, the Treasury Committee’s Second Report of Session 2006–07 (HC 115), The 2006 Pre-Budget Report, recommended that Government departments should report eYciency savings with reference to the OYce of Government Commerce’s (OGC) classification of “provisional”, “interim” and “final”. Defra had delivered £410 million of financial eYciencies by the end of December 2006. However, Defra’s 2007 Departmental Report makes no reference to whether the reported eYciency savings have been subject to audit or verification, and does not break down the savings by the OGC classifications.

29. Could the Department provide a breakdown of the reported £410 million financial eYciencies by the OGC classifications of “provisional”, “interim” and “final”

— Could the Department provide its quarterly OGC eYciency reports. Yes. We have attached the last three sets of reports.

Shared Services Reform of corporate services (eg HR and ﬁnance) was a major focus of the SR2004 EYciency Programme. Page 117 of the Departmental Report provides information on the Shared Service Programme. Unfortunately the web link to the Sector Plan is inactive. Figure 21 (Departmental Report, p.112) states that the workforce savings target from the “corporate sector reform” initiative has increased from 180–458 but also shows that only 182 workforce cuts were achieved by December 2006. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 18 Environment, Food and Rural Affairs Committee: Evidence

30. Could the Department provide:

— the Shared Service Transformation Programme Defra Sector Plan; We believe the link remains valid but have attached the plan for ease of reference.

— a breakdown of the financial savings arising therefrom; Economic benefits will be secured from four main sources, continuous improvement, improved technology, savings generated within customer organisations following take-on and economies of scale by increasing the user base. Organisations typically see benefits of 20%–30% from Shared Services. By far the most significant savings—Deloittes’ latest survey of global Shared Services Organisations indicates between 65 and 80% of the total saved—are realised in the customer organisation as a consequence of “onboarding”, where employees adopt new practices and become more eVective. The sector plan itself is not specific as to intended savings, however, the original business case for shared services is currently undergoing significant rework as a result of the changing resources, structures and scope within Defra and its delivery bodies. A revised document is expected at the end of July, which will set out in more detail the expected economic benefits to the Defra Network from the shared service approach.

— an explanation of how the savings relate to the statistics in Figures 20 and 21 (pp. 111–2 of the Departmental Report); Savings to date generated from Defra’s Shared Services approach are reported under the line entitled “FPRD Change Programme & Procure to Pay”, which amount to £6 million, generated mainly from centralisation of processing (continuous improvement) and transaction automation (improved technology).

— an explanation of how Defra will achieve the remaining 276 reductions envisaged. The workforce reduction target for corporate service reforms set out in the Departmental Report has been amalgamated into the target under Renew Programme to reduce the size of the core department. To this end, a workforce ceiling has been set for each business area. The Permanent Secretary announced these ceilings to staV on 7 June 2007. A copy of the table setting out ceilings by business area, including corporate services, is attached.

31. What level of additional finance and headcount eYciency savings will the mergers coming out of the Hampton review deliver in SR2004? — Could the Department provide a breakdown of these savings, and explain how they fit in with those reported on pp. 111–2 of the Departmental Report. The savings attributed to the Hampton Programme on Page 108 of the Departmental Report relate to reduced burden through better regulation and simplification. We do not anticipate Departmental eYciency savings to be generated by the Hampton Programme. — The Hampton Review recommended the merger of the Gangmasters Licensing Authority with the Health & Safety Executive; this has been agreed according to the Department’s 2006 Simplification Plan. However, the Departmental Report makes no mention of this in the section on “Better Regulation and simplification” (pp 106–7).

— Will the merger of the Gangmasters Licensing Authority with the Health & Safety Executive still go ahead by April 2009, as envisaged in the Simpliﬁcation Plan? Work to merge the GLA with the HSE by April 2009 is ongoing and project teams have been established to take this work forward.

Annex

Defra-led PSAs Defra is leading the development of two PSAs as part of CSR07. They are still under development, and will be finalised and agreed as part of the final CSR settlement. Delivery agreements for the PSAs will be published along with the CSR. The current drafts of the PSAs, their vision and proposed indicators are detailed below, but are still subject to discussion between the contributing departments and further refinement. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 19

Climate Change PSA “Leading the global eVort to avoid dangerous climate change by bringing about a step change in global investment in low carbon technologies, building on actions in the UK and EU and helping to build the necessary social, economic and political conditions internationally to: — Secure eVective and robust global commitments for the period post-2012, through engagement with our international partners, consistent with a trajectory to stabilise atmospheric greenhouse gas concentrations4, that will shift economies to a low carbon basis, including through an eYcient and eVective carbon market. — Adopt and promote policies which reduce greenhouse gas emissions to ensure that the new UK carbon dioxide (CO2) account, as defined in the draft Climate Change Bill,5 for the year 2050 is at least 60% lower than the 1990 baseline, moving to the levels required to achieve the carbon budget as set for 2008–12, 2013–17 and 2018–22 demonstrating to other parties the practical, economic, environmental and social benefits that tackling climate change in a cost eVective way can deliver. As a complement to our mitigation eVorts, develop a robust approach to domestic adaptation to climate change, shared across Government, and by encouraging adaptation to climate change internationally.” Further articulated into a vision of: Climate Change is one of the most daunting challenges facing the planet. Without significant mitigation, on business as usual trends, there will be a 50:50 chance of exceeding a 5)C temperature increase by the end of the 21st century—with devastating impacts on people and nature. Action is also necessary to adapt to the unavoidable eVects of climate change. Our vision is to play a leading role internationally and through domestic action to mitigate and adapt to climate change. We want to see:

International — Agreement to a post-2012 framework of commitments that can: — deliver reductions in greenhouse gas emissions consistent with a trajectory to stabilise atmospheric concentrations at a level which avoids dangerous climate change while being realistic, robust, durable and fair. — shift economies of all nations to take action to adapt to climate change. — A transformation in global public and private investment patterns consistent with low carbon growth and climate resilient development, including a fully operational Clean Energy Investment Framework. — International consensus that an urgent response to climate change is a security and prosperity imperative. — Donors and multilateral development institutions including the World Bank, mainstreaming and supporting adaptation across their assistance to developing countries. — The international community supporting adaptation through scaling up investment in global public goods including for example improved monitoring and prediction of climate change. — Development, deployment and transfer of low-carbon technologies world-wide, including collaboration with China, India and other developing countries on carbon capture and storage and with Southern Africa on biofuels. — Further development of international carbon markets including: — a revised European Union (EU) directive on emissions trading providing a long-term carbon price signal and the expansion of the scheme to sectors such as aviation; — the establishment of emissions trading schemes in other countries with the potential to link to the EU Emissions Trading Scheme (EU ETS); and — international agreement to the enhancement of existing ﬂexible mechanisms such as the Clean Development Mechanism (CDM). — International action to minimise emissions from land use and deforestation. — Sharing good practice and learning from other countries’ experiences.

4 The six greenhouse gases are: carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6). 5 More information on the draft Climate Change Bill and its key provisions can be found at: http://www.defra.gov.uk/ environment/climatechange/uk/legislation/index.htm Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Domestic — The Climate Change Bill enshrined in law, an eVective Committee on Climate Change in operation and the UK achieving its carbon budgets. — The UK achieving its targets, including its Kyoto commitment of a 12.5% reduction in greenhouse gasses (further details on the range of targets is set out in Annexes A and D).6

— The UK continuing to demonstrate that it is possible to reduce its CO2 and other greenhouse gas emissions without it adversely aVecting the health of its economy through a combination of fiscal, regulatory and trading mechanisms. — The UK public aware of how their behaviour can impact on the UK’s greenhouse gas emissions and taking action to change it accordingly. — An energy sector making a full contribution to eVorts to tackle climate change, while ensuring the reliable supply and eYcient use of clean, safe and competitively-priced energy. — The UK investing in the science and technology base to support stakeholders and adapt to climate change, including the development of projections of future climate change and other tools to facilitate the progress to a well adapted UK. — An economy and society that understands the complementary nature of adaptation and mitigation and which considers the risks of climate change in decision making processes. — A robust and accessible evidence base in place to support adaptation to climate change impacts, including an established monitoring network for detecting changes in biodiversity, and to provide an improved and wider understanding of the impacts that climate change could have on stability and security in many parts of the world. — A high level of awareness of the impacts of climate change on biodiversity, including the impacts of mitigation on biodiversity, and means of adaptation in all relevant sectors (for example agriculture, forestry, water, flood defence and energy). We will measure our progress towards delivering this PSA using five key indicators:

1. Global CO2 emissions to 2050—which will show the level and projected trends of global CO2 emissions which will allow us to see whether we are globally on track to avoid dangerous climate change. 2. Adaptation to climate change—indicator to be agreed. 3. Size of the global carbon market—which will show progress towards a viable international carbon trading system which is a vital component of a global low carbon economy.

4. Total UK greenhouse gas and CO2 emissions—which will show the UK’s net contribution to global greenhouse gas and CO2 emissions (both with and without credits from the EU ETS).

5. Greenhouse gas and CO2 intensity of UK economy—which will show whether the UK is successfully moving towards a low carbon economy (both with and without credits from the EU ETS). Additionally, the Government also produces annual emissions data for the basket of greenhouse gases, and total emissions broken down by source.

Natural Environment PSA “Secure a healthy natural environment for everyone’s well being, health and prosperity, now and in the future; and reﬂect in decision-making the value of the services that it provides.” Further articulated into a vision of: Our vision is for a diverse, healthy and resilient natural environment, which provides the basis for everyone’s well-being, health and prosperity now and in the future We want: — The air that we breathe free from harmful levels of pollutants — Sustainable water use which balances water quality, environment, supply and demand — Land and soils managed sustainably — Biodiversity valued, safeguarded and enhanced — Sustainable, living landscapes with best features conserved — Clean, healthy, safe, productive and biologically diverse oceans and seas — People to enjoy, understand and care for the natural environment We will measure our progress towards delivering this PSA using ﬁve key indicators:

6 1995 levels for Fluorinated or F-gases. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 21

1. Water—improving water quality as measured by parameters assessed by Environment Agency river water quality monitoring programmes. 2. Biodiversity—as measured by data on bird populations in England as a proxy for the health of wider biodiversity. 3. Air—improving air quality by meeting the Air Quality Strategy targets for eight air pollutants as illustrated by trends in measurements of two of the more important pollutants which aVect public health: particles and nitrogen dioxide. 4. Marine—clean, safe, healthy, productive and biologically diverse oceans and seas as indicated by proxy measurements of ﬁsh stocks, sea pollution and plankton status. 5. Land management—improving the contribution of agricultural land management to the natural environment as measured by the positive and negative impacts of farming. Department for Environment, Food and Rural AVairs July 2007

Witnesses: Ms Helen Ghosh, Permanent Secretary, and Mr Stephen Park, (Interim) Finance Director, Department for Environment, Food and Rural AVairs, gave evidence.

Chairman: Good afternoon, ladies and gentlemen, immediate progress. How do you handle that as an and welcome to this one-oV inquiry into Defra’s issue, because potentially you do not know what the Departmental Report for 2007. Just one or two compensation claims are likely to be? You will be points of housekeeping. It is likely that throughout aware that we are conducting another inquiry. I will the session we may be interrupted by divisions and not say that I speak for everyone, but some of us once the bell goes we will adjourn the meeting and around this table feel that it is about time we cracked try and get back within ten minutes of the bell to this disease and the only way in which that could continue our inquiry. We will try also to be crisp possibly be done is if we go for what we have always because I know the Permanent Secretary has a time looked at as plan B. Some of us would actually put deadline this afternoon of five o’clock and we will do a term to that now, which is vaccination, but that is our very best to respect that. Could I formally only going to be achieved if there are some serious welcome before the Committee Helen Ghosh, the resources put into the scientific evidence-based Permanent Secretary of Defra, and Mr Stephen research. Why do you not consider that and at least Park, the Interim Finance Director. Can I say at the give yourself some hope that you can save that £90 outset that I was personally impressed with this million a year, which would be a significant year’s Annual Report. I am grateful to the additional sum to be able to do things with—fuel Department for taking on board some of the poverty, rural access, and all the other issues you criticisms that we put forward last year. The chapter might like to tackle? length is much more manageable and the fact that Ms Ghosh: To answer the specific question about you have been candid enough to produce a page at how do we predict what compensation we might the beginning of each session both with the need to provide for clearly now that we have moved highlights and the issues certainly, I think, from to a table valuation approach to compensation, that interested readers is a big improvement. Even makes it easier for us to predict, and we have trends though perhaps some of the issues could be which the Chief Veterinary OYcer looks at and can improved with even more candour, it is certainly a make some kind of forward projection, but you are big improvement and I welcome the fact that within absolutely right. What we are currently in the the body of each of these sections is a breakdown of process of doing in light of the Independent more detail on the funding for the areas which are Scientific Group report is considering our strategy discussed in the narrative. Before, the only way in around Bovine TB. As you say, it has a range of which you got any statistical information about possible levers we can use. One of them is research Defra’s expenditure was in vast broad brush tables on vaccination and I think the latest advice from our at the back, which were not entirely helpful. Having scientific advisers is that—and, as you say, this is got those nice words out of the way, the Mr Nasty something the Committee will be looking at in its bit will start when we come back after the vote. We report—I do not believe putting significant further will adjourn for approximately ten minutes. money into it is the answer. There are lots of The Committee suspended from 3.07 pm to 3.16 pm significant scientific issues which mean that for a division in the House vaccination is not, however much money we put into it, going to give us a solution in the short-term. I am Chairman: We will now start on our detailed very keen that the date at which it becomes a questions, beginning with one or two little points on solution does not keep moving further away, Bovine TB. because it has been a long way away for a long time.

Q1 (18.07.07) Mr Drew: If I could start with what is Q2 (18.07.07) Mr Drew: Ten years. one of your intractable problems, you have got to Ms Ghosh: We will certainly be considering that in allocate a budget of £90 million a year and rising to thinking about our CSR funding, but what a problem where it is very diYcult to see any Ministers clearly need to look at is the right mix of Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 22 Environment, Food and Rural Affairs Committee: Evidence

18 July 2007 Ms Helen Ghosh and Mr Stephen Park solutions—testing and improving testing, policy, so how are you arranging the cultural change particularly with more focus on the gamma which is going to turn your senior oYcials into Interferon test, the success and the way forward on managers of projects, and how on earth are you movement testing, and then of course they need to going to ignite passion and pace? When are we going look very carefully at the outcome of the to see passionate, pacey people in Defra? Independent Scientific Group Report, which I know Ms Ghosh: Let me give you an immediate example of Members will have looked at in the context of their some passion and pace in the Department, and that study. was the speed at which we responded to the farming industry’s request for an amendment to the Single Q3 (18.07.07) Mr Drew: And will the Minister Payment Scheme rules—in response to farmers actually see the ISG? saying to Hilary one day at the Great Yorkshire Ms Ghosh: Of course Hilary Benn, the Secretary of show, “We can’t cope with this. We need to put our State, has only just arrived. He is just getting initial tractors on flooded fields. We need to be able to briefings on Bovine TB— graze animals on set-aside.” I think the next day, or the day after that, we had got our amendment in – Q4 (18.07.07) Mr Drew: It would be helpful if the Minister was to actually see the ISG. Q9 (18.07.07) Chairman: Is that why it took you 50 Ms Ghosh: Yes. JeV Rooker—sorry, no, I will not per cent longer than you should have done to take his name in vain—a number of Defra ministers respond to our report on the RPA? They had to send have historically seen the ISG and I imagine that a letter of apology. Hilary will want to do the same. So we are looking Ms Ghosh: Let me just say it required clearance at that, we are looking at all the aspects and we will within Whitehall. That was not a problem within obviously take into account the deliberations of this Defra. Defra met its part of the timetable. Passion Committee if they are on an appropriate timetable, and pace: I think I sent in the further information but we are very clear that what the farming you asked for, the OGC assessment of the Renew community wants is an early decision. programme as a whole, which actually commended us for our passion and pace. You would already see, Q5 (18.07.07) Chairman: Just in case there has been if you came back with colleagues from the some strange manifestation on page 80, figure 17, Committee, that a number of the elements of Renew could you tell me if there is a printing error there? are in place. There are projects and programmes Ms Ghosh: I think there is a printing error. I must go being developed. We will have a portfolio which we back to the team on that. It does not add up to 100, will take forward into business planning for next does it? year. As I explained, I have made some changes on my management board. I have got in the Q6 (18.07.07) Chairman: No. I thought £441 million Department—and again the OGC commented on in one year’s compensation was a tad on the this—a lot of engagement from the senior team. So generous side! leadership, I think, is the key way in which we inject Ms Ghosh: It is in fact the total. Sorry, I was thinking passion and pace, set high standards and drive things the same thing on the train this morning and it does forward. I must say we have been very lucky in both not add up to 100 at the bottom, so it must be 44. I our previous ministers and our current set of will confirm that with you. I think it is a mistake. Ministers, who want things to happen, and they are also setting a pace on the policy and delivery side. Q7 (18.07.07) Chairman: I just wanted to make certain this was not some piece of subtle Q10 (18.07.07) Chairman: How do you actually get expenditure. the mindset altered, because looking at the Ms Ghosh: No, and I do not think it is a gross figure document you kindly sent as an annexe to the oV which we netted anything. written replies, presented to the Committee, there is a document here called, “Embedding the Capability Q8 (18.07.07) Chairman: Right. Let us move on to Review actions,” and it is a bit sparse on ticks and the Defra Renew programme, which you kindly things that are actually happening and it is quite gave a presentation of to the Select Committee. One diYcult to derive from there? You have got an awful of the criteria by which you will have assessed in lot of project design, but not a great deal of action terms of this renewal programme was the ability of and delivery. Most of it is in the middle of next year. the Department to ignite passion and pace. I am not Ms Ghosh: As I say, actually there are a number of certain quite how you actually do that with your things. We had a conference with the SCS earlier this colleagues, but Defra was not exactly given a week focusing on things that we have actually commendable performance rating about its ability done—the Senior Civil Service, which means in our to ignite people in this particular approach. Looking Department about 180 of us out of the 12,000 total. at the other criteria which Renew Defra has got to That is the senior cadre. As I say, a number of the fulfil, taking responsibility for leading delivery and things that Renew promised to do were to move to change, planning resource and prioritise and project and programmes, to change the role of the manage performance, that provides Defra with DGs, to start building more eVective processes, for some serious management challenges as opposed to example, through business planning and other ways. people whose life up to now has been very much If you came to the Department and talked to, for focused on developing policy and implementing example, my food chain team (who are looking at Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park things like the carbon impact of food production) things, but we do not have a systematic way which is they would be talking in what we would call Renew consistent across the Department of developing terms. So within the Department you would see it. policy, implementing EU directives, doing business Some of those things are cultural. They require planning. That is the stuV we never really got glued, leadership from the top, they require myself and the and that is one of the elements which Renew needs management board and the SCS to simply not to take forward. accept something which is slowly paced. Some of the V systems stu , however, is simply systems. In some Q13 (18.07.07) Chairman: So you have blended into senses there is a cultural issue. When you have got a Renew the undone bits of the Reform Programme? Defra way of doing things you have got to make sure Ms Ghosh: Yes, indeed. everybody does it, but actually what we need to do is to work through in a lot of detail—which Stephen What about the staV is doing with Bill Stow in my strategy team—how we Q14 (18.07.07) Chairman: implications of Renew? Perhaps you can give the put in place a business planning process for the CSR Committee an insight into what it actually means? It 07 period which is fit for purpose, that means at the is all right talking about it in, if you like, the end of the CSR 07 period we have the same management-speak of delivery but what does it information from directors covering the right kinds actually mean in the hard nitty-gritty of people and of performance outcomes. That is work that will budget? take a bit longer because we need to get it right. Ms Ghosh: In terms of the way the Department works—and I will come back to the issues about Q11 (18.07.07) Chairman: Does this mean that we people and budget—it will mean that we will be are going to see an end in ministers’ statements of needing to develop and build on (because many of words like “shortly” and “soon”, or “autumn” or our staV have these skills already) a more flexible “spring”, which have always been highly elastic approach to the work they do, for example, so that phrases and which do not sit well with a they can work in projects and programmes and be management style which is focused on delivery able and feel confident about moving on to another against predetermined timetables, milestones, et project when project A is finished and project B cetera? begins. We are working on the skills element there, Ms Ghosh: There will always be, I think, a balance, but we will also always need to maintain a cadre of as Members of the Committee and you, Chairman, people who are specialists, so we will always need the will know yourself, between getting the right answer soil scientist, the climate change scientist, the and an answer quickly. Bovine TB has gone on too biodiversity specialist and the economist, and what long, but actually there are still issues which we need we will be doing is making sure we can develop their to work through to that end. Again, if you look at professional skills while using them in a project and the Department’s record over the last year, who programme sort of way. So there is a skills element. would have thought that from a standing start of There is then an issue for us in the Department about zero we would have got to a draft Climate Change the shape we want to be. Traditionally, historically Bill, which the Committee has looked at, being we have been a triangular department. It varies introduced in the next session from nothing? That, across the Department, but more administrative again, is a wonderful example of pace and oYcers than a policy-making and influencing leadership. I think the success we had on the next department in theory needs. If you look at the phase of the EU ETS is because actually we were Treasury, for example, it has very few junior staV.It pacey and we were responsive. What I am using in has what I call an oval shape, and I think with the the Department are those examples of what we can move to devolved delivery to our executive agencies do, and what we can do with clear political we need to become more oval. We also need, in order leadership and a good strategy, and I think we are to deliver both the Gershon savings we are signed up demonstrating that we can do it. Some things will to and CSR 07 five per cent year on year admin take a bit longer because we have to get them right. reductions, to be smaller so what we are doing is using the Renew programme as part of delivering a Q12 (18.07.07) Chairman: How does the new Renew smaller Department. As you know, Chairman, one programme dovetail in with what was the of the things we are doing this year to achieve our Departmental Reform Programme? Has that now 1400 reduction over the SR O4 period is to use V been finished with? Does Renew take the place of Renew to reshape teams to encourage sta who, in that? a sense, do not want to be part of the new Defra to Ms Ghosh: Yes. The Departmental Reform leave. We have got funding from the Treasury for up Programme, I think even its supporters would say, to about 200 voluntary departures. tailed oV towards the end of its period. Certainly by the time I arrived in the Department it had done Q15 (18.07.07) Chairman: So where will that bite? some very good things and some of the leadership Whereabouts is it going to bite? work we are doing with the management board and Ms Ghosh: It is a voluntary scheme, so what we will the culture around our leadership behaviours were need to do is to say—which we will be launching next ones which were well ingrained in the Department as week—“Here is a scheme. Please come forward. a result of that. Some of the other stuV, which, for Please volunteer,” and obviously we are hoping, as example, the Capability Review picked up is that we we have said to staV, that the majority of the do not have a Defra way of doing things. We do reductions we need to meet our 1400 will come out Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 24 Environment, Food and Rural Affairs Committee: Evidence

18 July 2007 Ms Helen Ghosh and Mr Stephen Park of voluntary reductions. What we will then do is to at really any restriction on potential competition, have a system for redeploying staV across the business opportunities as being a dangerous Department. As you know from the material we precedent being set? have sent, we are constantly choosing within our Ms Ghosh: Yes. 3,100 core in the Department to move staV towards the priorities, so the climate change group is expanding, food and farming is slightly declining, Q20 (18.07.07) Mr Drew: So that is one, and we felt the service transformation part is declining, and we that Defra could have been much more robust in the will want to say, “Okay, these staV have left. We way in which it was implementing it. We have have retained the people whom we regard as the produced our report, and you have seen that and national treasures we cannot aVord to lose, but these there is a lot of questions about what the staV have left and now we will have a process— Department is going to do subsequently. The second obviously agreed with the trade union side—for one is a report (as yet unpublished) for BW, but I reallocating people into the expanded areas from the think it is fair to say from the evidence we have declining areas”. That is how it will work. received that it would be pretty apparent that there is a number of other departments which stand to gain by the sort of work that Defra has been doing What is the staV feedback Q16 (18.07.07) Chairman: with the advice of BW, certainly again the DTI with so far on this process, because your people have been all the opportunities of development around the subjected to a lot of change in the last two, three, canals, and the Culture, Media and Sport four years. Are you able to now say, “This is the Department has responsibility for some of the direction of travel”? cultural aspects, the museums and some of the other Ms Ghosh: Yes. things which come with that, yet it was apparent that Defra was eVectively left to carry the can for Q17 (18.07.07) Chairman: Are they responding anything that was going wrong and was giving very positively? little help in the things that might, with some Ms Ghosh: They are responding as positively as you attempted catalyst of activity, have led to even better would expect in organisations like ours. There is a outcomes. How do you respond to those criticisms? lot of very positive response to the career Ms Ghosh: I think we have discussed this in earlier opportunities which are more flexible, and which sessions with the Committee. There are two things. project and programme working gives us. Some I think the influence of a department depends people are clearly fearful and we are giving support crucially on the hard evidence it brings and I think both to them and to their line managers so that they one of the things we consistently get very high praise can talk through the opportunities for those who for is our science-base—we had an excellent OYce of might want to leave and the opportunities for Science and Innovation Report on our science remaining in the Department. Essentially, we need recently. Historically, perhaps less good, but as the to set up, and we are setting up, the right kinds of Capability Review said, better and better on support mechanisms for those people. I have to say, economics. So first of all the ways we become as an organisation we have no problem in attracting influential as a department is by having cracking people. We can always get good graduates of all good arguments to put, and I think a very good kinds to come and join us, so we are not worried example of that was the success—and I do not want about the fundamental skills drain. this to sound like a competition—which as a department we had in setting an ambitious Q18 (18.07.07) Chairman: I wonder if on a quarterly benchmark proposal for our CAP in the next round basis you would commit to updating the Committee of EU ETS. We could not have achieved that kind of on the progress you are making, so that we can agreement across Whitehall if we had not had very monitor the pace and passion with which you are good arguments about competitiveness, the moving to meet your objectives? economy, alongside the environment, so that is one Ms Ghosh: Certainly, yes. of the things I focus on. Again, we have sent the Chairman: With that, I will move on to David Drew. Committee some material on this, but the story will unroll further on this: the new PSA structure will be Q19 (18.07.07) Mr Drew: If we can look at this really extremely helpful because we will have, as you will perennial problem which Defra faces, which is that have seen, a climate change objective with a vision you have many targets, you have many worthwhile and a number of subsidiary objectives, and it will not aims, but you have really a great deal of dependence just be ours. We will not have to sort of knock on upon other departments to deliver many of those everybody’s door. All relevant departments will also aims, and I wonder how you would portray your be signed up to that and there is a piece of work relationships with the departments? Let me just give going on at the moment—I think they have you two instances, both of which this Committee restructured Cabinet Committees and I am not sure have looked at recently. The first one is the whether that is strictly speaking what will happen, Environment Liability Directive. From all the but to make sure there is the right kind of evidence which Madeline and myself in particular interdepartmental machinery at ministerial level, found out, it would appear that Defra was going to which says, “Okay, you guys, you are all signed up be quite robust in how this was going to be to the climate change target, so Transport, what are implemented but the then Department, the DTI you doing? DBERR, what are you doing? Defra, (DBERR as we can now lovingly call it), was looking what are you doing?” We may still in some areas, for Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park example on the international strategy, be sort of European and certainly a strong national ringmasters and deliverers, but it will be much more prerogative to do so. Again, how do you try and deal joined up across Government and I think that is the with that frustration? kind of issue – Ms Ghosh: Positively, I would say, is how we deal with that frustration. Again, there are all sorts of Q21 (18.07.07) Chairman: Can I just ask you, in that elements. If you take the example of waste, there are context of Transport being signed up to climate lots of things we need to do to make it succeed. We change, does “signed up” also mean putting their need to have the infrastructure, some of which hands in their collective pot and paying for relates to the planning issues and then relates back programmes to help achieve their share of the to where one puts things and land. We need to have climate reduction programme? the money in the right place, and some of that money Ms Ghosh: Indeed. It might require putting money comes from us, as you say, directly to local in their pocket. You will have seen, for example, it government, some comes through the Revenue’s was they who paid for the rather good support grant settlement and some comes through advertisements with all the engines driving around PFIs. We need to make sure that local authorities in an imaginary city that was “Act on the CO2.” That particular have the right kinds of incentives. So if was put out by the Department of Transport; that you take that case, just to take the current example, was not our advert. So that was an example, and the current challenges set out in the waste strategy, obviously they have got stuV to deliver through we have worked very closely with the people things like the EU Directives on car emissions, and working on the Eddington and Barker planning we are working very closely with them on how we reviews because of the implication which is bring to life our aim of getting aviation to the next obviously being consulted on at the moment. EU ETS. So it may be them dipping their hands in Clearly, there are particular issues about energy their pocket, it may be us working together on infrastructure and airports, and so on, but there is policy, it may be them going oV and fighting the also an issue about waste infrastructure and we have European battle on behalf of all of us. been working very closely with DCLG on the appropriate planning regime for waste infrastructure, in particular some of the If you think they are being Q22 (18.07.07) Chairman: developments which are always controversial, a bit tight on their budget, do you ring up the energy from waste plants. We are dealing within our Permanent Secretary in Transport and say, “We own CSR and the Treasury on the debate about need a bit more cash from you to make this thing funding, but equally we are very closely engaged and work”? Neil Thornton, our director of waste, has been Ms Ghosh: I think the beauty of the new proposal is involved with colleagues this very morning in a that it will not rely on my doing that bilaterally, there meeting on how waste and local environment quality will actually be a Whitehall machine for all the set of issues are covered in the Revenue Support Grant PSAs. The news today suggested we were about to Settlement, because that is a key part of our delivery, announce something about what they were. All the and we are talking to the Treasury and others about PSAs will have that kind of machinery, where the PFI, so we are actually joining it up together. Waste, ministers will equally be saying to each other, “If we in its sustainable consumption and production are all collectively going to achieve our climate context, will be one of our departmental strategic change objectives, then we all have to work objectives, again all under the umbrella of our together,” and it will not just be Defra knocking on climate change PSA, so there will be Whitehall the door, it will be a collective eVort, and that is with machinery to put that through, but we are actually all the new PSAs. So I am delivering to a wide range working very closely with the others. of PSAs that are not our PSAs as well as to my own. As I say, I think there are lots of good recent examples of where we have been much more Q24 (18.07.07) Mr Drew: Let me just give you one successful at influencing. last scenario with regard to land use and the sorts of dilemmas that you face and see if you can help me Q23 (18.07.07) Mr Drew: If we are going to home in resolve the way you think you can take these answers on one aspect of this relationship with other forward. If we look at the current, I think departments and other bodies, that is the use of land understandable, obsession with the need to provide and how (slightly at a tangent, but not much) we are aVordable housing, you are going to be faced by about to launch another inquiry into waste. It is some quite diYcult decisions inasmuch as you have interesting that although Defra would be leading on an environmental protection responsibility, but you this, so much of your ability to deliver on those also want to see vibrant rural economies and the objectives is entirely dependent upon local only way you are going to get some vibrancy back is authorities. I suspect what we will see, unless things if you have some aVordable housing in those have dramatically changed from previous inquiries communities. To what extent do you think you can is that the good authorities will be very good and the and should be influencing the other departments weak authorities will be woeful in this area, and yet which will clearly have a major part to play, CLG Government will be measured collectively on being the lead but again DBERR would no doubt whether it has got its recycling target up to the level it have some views on how it would need to look at the should be and whether in fact it is able to divert away economic regeneration, and so on and so forth? How from landfill to the extent to which we have a do you take this forward because, as I say, you are Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park going to be really the meat in the sandwich because Agency, Rural Payments Agency, British there are going to be those coming to you saying, Waterways and no doubt others, so what have you “You mustn’t ever build here because this is a prime done to put matters to right? What is diVerent in piece of our landscape which shouldn’t ever be in terms of this financial year compared with last, in any way threatened by housing,” to which there will terms of your financial management techniques? be an equal number of people saying, “If you don’t Ms Ghosh: I did not introduce Stephen. Of course, build here, you won’t have anybody left in this part he was not the finance director you talked to last of the world”? time. Ms Ghosh: I think the issue you raise at the end is a very big issue, which I think we will come back to Q26 (18.07.07) Chairman: No, I know he was not, over the months and years, which is about how you that is why I am asking. He is the new kid on the use land. There are all sorts of interesting issues. block and we want to know from the new man what David Miliband gave a speech to the CPRE not long he has done compared with what he inherited. So before he left about how we think about land and it what is new in financial management terms? may be that we have got lots of protection, but we Mr Park: Let me start by saying that 2007-08 is may have protection in some places on the wrong another year where we have to manage our finances land which is less bio diverse and less on the right quite carefully, as we have in previous years, and it land. Particularly in the case of aVordable housing— is important that we get down to the correct running and clearly we are thinking about this a lot at the rate for starting the CSR period. moment given the new Prime Minister’s commitment to housing and expansion—we are Q27 (18.07.07) Chairman: What does “get down to working very closely with DCLG and others on land the correct running rate” mean? availability. To go back to British Waterways, again Mr Park: That means that although the CSR we do have land, and all the departments are being settlement is not yet agreed with Treasury, we are asked to think about this. We have land, or some of expecting a taut settlement and therefore we need to our delivery bodies have land, which might be be sure that we can provide assurance to the suitable, so we will be looking at the provision of Permanent Secretary and to ministers that we can land. I think recent events on flooding have really live within that taut settlement. focused the minds on issues around not building in Ms Ghosh: As I think I have said to the Committee inappropriate places, so I think that will have before, there are some elements which eVectively are reinforced the issue about, “Please don’t build this already public knowledge where we have got some on flood plains,” and we have got some good agreement to increase spending, for example the evidence there. When it comes to biodiversity flood figure for the third year of the settlement, the impacts, we are getting, I think, better and better as £800 million which Hilary announced, and the kinds a department at thinking not in the fully World Bank of match funding we will be doing on the voluntary worked up version but the idea of the sort of modulation on ERDP are out there, but the rest of ecosystems approach. We can increasingly prove the settlement will be, we are 99.9 per cent sure, what that damaging bio diverse environments in some V we expect it to be, which is flat cash for our places actually has an economic e ect, and the more programme and five per cent declining. That is what we can develop that idea, the eco systems approach, Stephen means by having a tight settlement. the better we will get in that kind of planning debate. On rural housing, our new ministerial team is very keen to follow up the Elinor Goodman study on Q28 (18.07.07) Chairman: Mr Park is right, we have rural housing and will be looking, whatever the not actually got the CSR bit, but the implication of outcome is, at taking forward Gordon Brown’s what he said is that you are anticipating the kind of initiative for a particular place for rural housing, but flat cash situation, so I am almost getting the as you know the issues there are rather curious ones impression that either you are expecting a bit more where some parts of rural communities really want of a squeeze this year or you are putting something local housing and land owners want to give the land in the piggy bank. Which is it? to build it, whereas there are other people living in Mr Park: I think Defra, like all good departments, that same community who do not. So there is a real needs good, prudent financial management, so we are making sure that we are living within our means political issue there as well as the sort of practical, going into the CSR settlement. how do you get the land assembly and the houses built, but we have got a group of ministers and Jonathan Shaw is particularly keen on taking that Q29 (18.07.07) Chairman: I am going to ask another up with DCLG. question, but that leads me to an observation about the way you deal with some of these financial issues in the report because, for example—and I just pick Q25 (18.07.07) Chairman: Right, Mr Park, your this at random—page 177, table 2, you have got the moment to shine comes because we are going to turn departmental expenditure limited funds and you to the question of Defra’s accounts. The last time we could point to any one of these tables and you have talked about Defra’s accounting you got something got columns of outturn figures but no comparative of a belting from us because you appeared not to budget data. In other words, as an observer looking have understood the Treasury rules about annual to see whether you were living within your means or flexibility and you end up by having mid-year not, I have no idea. All I know is how much you have changes to your plans which aVect the Environment spent. What I do not know is when you started the Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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financial year what you were anticipating spending administration of the Department.” So it falls from and what you did actually achieve. Where do I get 334—in fact we did not spend 334—to 285 this year, that kind of information from? so the process we are going through in this year is Ms Ghosh: The factual answer to the question you making sure that we have got budgets allocated for ask is—and obviously this long predated Stephen’s this year which enable us to end up the year hitting, arrival—as we have discussed before, eVectively you if not necessarily 285 precisely, a figure which is can take it almost as read that Defra was coming in aVordable within the Department. So when we have on or slightly below budget for every year before done that exercise we will be very happy to share 2006-07. with you what we are expecting to come out against those figures. Q30 (18.07.07) Chairman: That was not actually the question I asked. What I was talking about was Q33 (18.07.07) Chairman: Good. I am just saying where some of the areas of expenditure, which are that if we are now going to improve yet further on detailed in tables 1, 2, 3, through to wherever, in the the transparency that this report aVords us we need back of the report – a bit of benchmarking to enable us to see what the Ms Ghosh: How did we jiggle around – direction of travel is and how good your performance is against where we started out from. Q31 (18.07.07) Chairman: No, not jiggling around. Ms Ghosh: Yes, but before asking Stephen to talk If I look at this as a piece of financial information, about how we are trying to get a better handle I how is Defra doing, I can see up to the close of the would just like to remind the Committee that events financial year 2005-06 what you actually spent will hit us. So the fact that we may have ended up because you publish the outturn figures. What I do shifting the spend between, say, animal health and not know is what was the deviation from the climate change, or if we had a bad outbreak of avian budgetary starting point. In other words, if I am flu, climate change into animal health, it is not a asking whether a company has done well or badly I failure, it is just – would look at the expenditure budget and then I would look and see what you actually did to know Q34 (18.07.07) Chairman: But that is no diVerent whether you went up, down, or remained level, and from a company which has had to provide a lump then I would ask some questions as to what sum on the accounts to explain to the shareholders happened if there was a diVerence between the what occurred. Nobody expects you necessarily to budget, because either it could be that the budget absolutely do what you say you are going to do, but was ill-set or there have been some operational unless you know where you are starting out from changes, or whatever, but it gives us a benchmark. you cannot tell your story in numbers as to what is What this is missing is that there is no benchmark, happening and therefore provide an explanation as so why? to why, so internally, Mr Park, are you devolving Ms Ghosh: Exactly. There is no reason why we budget management down in the system, and if you should not put it in if you do not mind a more are what diVerence is that making to financial complicated table. We could perfectly well put in controls in Defra now you are in charge? these tables what in some of these years (although it Mr Park: Part of the Renew programme is to would not apply to all of them) the SR O4 devolve responsibility and accountability down assumption would be. For example, eVectively for within the organisation and to make sure that we 2007-08 many of these figures are what we are have clear performance management within that so assuming we will spend this year, and equally you that the directors have information on which they could put against those figures what was the SR O4 can manage their part of the budget. assumption, but as you know events will change. Q35 (18.07.07) Chairman: Do the directors set their Q32 (18.07.07) Chairman: The reason I ask that is budgets, or do you drop it down on top of them? because Mr Park made a very interesting statement Mr Park: The directors propose their business plans at the beginning. He said, “I am going to have to run and that goes through a review process, as it would this Department very carefully, very tightly, because in any other organisation, to in a sense check that I know that in 12 months’ time I am going to have and make sure that a balance is correct across the to run this ship at an even lower level than I am at Department and to make sure that it reflects the the moment, in other words if we are going for a flat priorities of the Department. cash settlement.” So if I wanted to know whether you were on track, I need to know where you are starting from. I need to know what the benchmark Q36 (18.07.07) Chairman: What is the sanction if is so that when we come, in 12 months’ time, to have they do not keep to budget? this inquisition again I can see whether Mr Park Mr Park: That is where the Renew programme is actually achieved his financial objectives or not. introducing performance management, so that there Ms Ghosh: Yes, and if I can pick up that theme, for will be regular reviews throughout the year. this year in particular the stress on the Department is, as you will see from the administrative line, “As Q37 (18.07.07) Chairman: The question I asked is, planned in the SR O4 predictions, this year in what is the sanction if you do not hit your budget administrative terms sees a significant downturn in and there is not a good explanation, in other words what we were planning to spend on the if you do not control it properly? Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Mr Park: Part of the improvement under Renew Ms Ghosh: Yes. would be that there would be reviews during the year so that there would be correction opportunities in Q43 (18.07.07) Chairman: When we were doing our terms of people changing their spending British Waterways inquiry they told us at their commitments and their spending plans throughout planning assumption was minus five per cent RPI. the year, so we would expect that through the course Who has decided the planning assumptions for your of the year it would be back on track. subordinate bodies like the Environment Agency Ms Ghosh: I think there is a cultural point, which is and BW? what we are trying to build on, both through the Ms Ghosh: No one has yet decided those, and I think cultural element of Renew but also the work Stephen something that Stephen and I, and my management is doing on financial systems. Historically again, in board, will be looking at very carefully when we have a sense there was not a penalty if people overspent, got the CSR settlement is to make sure that we are particularly with their programme budget, because working with our delivery bodies but very actually there was always enough money and I think importantly build a sustainable plan and in the sense we have discussed before of both programme which matches ministerial priorities programme and admin spend in particular having to across the CSR period. If we have got a tighter slow down, that is the cultural change that we are amount of money, we cannot have—and it is the case really working together to build into the that ministers have already announced some Department. commitments in high priority areas—a basis where the delivery bodies, as it were, make an assumption Q38 (18.07.07) Chairman: So in terms of systems, do and rush away with the money. What we have got to I get the impression that you are building into Defra do, when we have the settlement, is build up from a far more up to date way of monitoring your actual almost a zero base and say, “These are our interests real world expenditure versus budget? and commitments around floods, or around Mr Park: Yes. It will start small and get bigger over voluntary modulation.” time. To introduce an “all singing, all dancing” system will take some time, so my intention is to Q44 (18.07.07) Chairman: Hang on, this does not introduce something that is simple but eVective and make sense. It does not make sense in terms of a then improve the eVectiveness of that as we learn as budgetary process because you said, Mr Park, a an organisation, as we use it to manage the moment ago that it was directors who eVectively performance. made proposals for their budgets, and therefore I would have expected the Environment Agency, BW, and all the other subordinate bodies to have made Q39 (18.07.07) Chairman: So if I said to you, “When their proposals. can I come and look at Defra’s cashflow position?” Ms Ghosh: No, sorry, they have not made any when can I do that? proposals. Ms Ghosh: October, or at a time when we are checking the performance against budget. October would be a good time, because that is when we do Q45 (18.07.07) Chairman: So how do you know our six monthly review. what to bid for with the Treasury, then? Mr Park: Yes, I think that would be. Ms Ghosh: The CSR 2007 was a process where actually we were not encouraged on the whole to bid. We were given very clear guidelines across the piece Q40 (18.07.07) Chairman: You have indicated that that actually, apart from DFID and schools and you anticipate in the Comprehensive Spending hospitals and areas that were growing, most of the Review—by the way, when is it going to be rest of us would not be bidding. So what we did there announced? When is the great mystery going to be was that we did indeed work with, in particular, revealed unto us? people like the Environment Agency and Natural Ms Ghosh: I was about to say either before the recess England on the issues around the new RDP or in the autumn, that is the answer, but time is programme about what their view was of a sensible ticking on for before the recess, so either side of the level of spend, in particular around flood recess is a possibilty. We are not the only department management. So we did work with our delivery which has not got an agreed – bodies on the arguments we would put to Treasury about the particular spending pressures we would have, so that was a collaborative output. What we Q41 (18.07.07) Chairman: I thought under Renew you were trying to be a little bit more specific, but I need to do when we have a formal settlement is to presume you blame it on the Treasury for not having make sure that within whatever envelope we have told you when they are going to announce it? actually we can meet all our requirements. What we Ms Ghosh: You take the words right out of my need to do is learn, in a sense, from history and say, mouth! Clearly, this is something where there are a “Before we commit to particular budgets for number of departments whose settlements have still delivery bodies and particular administrative spend not been announced yet. we need collectively to make sure that it is sustainable over the period.” So when I say we take the CSR settlement and we work through it in terms Q42 (18.07.07) Chairman: Okay. Your planning of where our commitments are and where our assumption then is level cash? priorities are, we want to do that with the delivery Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park bodies before we say to British Waterways or to the Q51 (18.07.07) Mr Drew: Are these permanent staV, Environment Agency, “Here’s your money.” We or agency staV? need to make sure that actually the totality adds up Ms Ghosh: Yes, these will be full-time equivalent to the amount of money we have got. permanent staV whom we are paying, and that will be across the whole of Defra, so that is against our 12500 head count across the whole Department Q46 (18.07.07) Chairman: But you must have given some indication to the Treasury as to the type of when we began. We have been in negotiation with level of budgetary requirement to run the the Treasury because of the problems at RPA. We are not being held to our original 2,400 reduction Department? V Ms Ghosh: I think there are some departments which because e ectively to all intents and purposes, as you have flat cash on an admin spend, but most say, the savings they were going to produce they departments are like us. We are all, in administrative could not produce if we were going to maintain the terms, going to live at minus five and most people service and improve our service to farmers, so they will get flat cash, unless you can prove there are have not been touched. As I say, we have got the pressure areas. money for around—as well as the rolling programme of VERs and the compulsory redundancies which are taking place, for example, at Q47 (18.07.07) Chairman: There are a lot more the Wildlife Unit—200 voluntary early retirements elements to your budget than just the which need to come through, broadly speaking, by administrative bit? March 08. So we have got a plan for how to do it. Ms Ghosh: Indeed there are, and then they invited us Although we will need to control figures in the to talk to them about the areas we thought would be delivery bodies, that will be taken out of the policy particularly pressurised if the assumption was flat core of Defra in the way I described earlier. cash programmes, i.e. in real terms a reduction, which is why we have talked to them and Hilary Is it true that there is now announced the overall outcome on flood protection. Q52 (18.07.07) Mr Drew: an additional 200 redundancies to be found as We had to talk to them about voluntary modulation regards the Renew Defra headcount? and match funding, but we have yet to take Ms Ghosh: No, no – decisions, once the CSR settlement is announced, on how we slice up the rest of the cake, and we are very conscious that we need to do that rapidly and in Q53 (18.07.07) Mr Drew: The 200 are within the partnership with delivery bodies but in a way which 1400? means that we can go into every year with the Ms Ghosh: We are just using the Renew Defra planning you describe. programme as a way of delivering the savings we need to deliver, the 1400, in the best possible way. We do not want to slash any further. Q48 (18.07.07) Mr Drew: So many of your plans are predicated on the eYciency savings through So the 200 are part of the reducing staV numbers and yet, as you know, the Q54 (18.07.07) Mr Drew: 1400? investigation we conducted into the RPA did Ms Ghosh: The 200 are part of the 1400 which we pointedly demonstrate that a number of those staV need to find over the SR 04 period. removals led to later problems and in fact—I cannot remember the numbers exactly, but you really had to replace virtually everybody you removed because of Q55 (18.07.07) Mr Drew: The manner of actually the disasters that overtook you. What guarantees removing people. When this Department was set up V have we got that if you are actually going to move one of the big grouses of the sta was that because it V people from within the Department itself it will be came from two very di erent cultures, the old any more successfully delivered? DETR and the very old MAFF, there were V Ms Ghosh: Because I have got to do it. I have got to considerable di erentiations in terms of money, pay do it for two reasons, (a) because I am signed up and conditions for people. To what extent has that through the Gershon commitments and through the now been resolved? This is not an exercise, if you V arrangements I have with the Treasury for funding like, for e ectively removing some of the people who to deliver 1400 reductions over the SR O4 period by have never really become part of the culture of new the end of this year, and because – Defra? Ms Ghosh: No. In practical terms, in financial terms, everybody is on the same set of terms and conditions Q49 (18.07.07) Mr Drew: That is eight months, is within core Defra because we had to equalise for that correct? equal pay terms. That has meant, as a department, Ms Ghosh: Yes, exactly. we are in Whitehall terms a relatively high payer if you look at the minima and maxima on average. We Q50 (18.07.07) Mr Drew: So eVectively it is an eight and a couple of other departments, partly because month time span? we all came out of the same Department of the Ms Ghosh: It is an eight month time span, but we are Environment stable, ourselves, DCLG and the already making progress in this year. For example, Department for Transport, are all relatively of the 1400—and that starts at the beginning of April speaking high payers. That does present us with 04—we have already reduced by 820 in total, so we issues around pay remits and Treasury pressure to be are adding all the time. more coherent. Increasingly, too, I know there were Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park some historic issues with pay rates in our agencies, Ms Ghosh: We did, as—in fact it was not strictly particularly around the RPA. Actually, for business speaking part of the Renew programme, but it was reasons, recent pay remits to our agencies have a policy project that I initiated, thinking about this increasingly brought them into line with core Defra, administrative point. We have done quite a detailed so the diVerences across Defra as an organisation are exercise on what is the minimum number of people very small now and all of that will be completely you could have in a department in a policy core and invisible in the VER/VES scheme. after lots of work both, as it were, bottom up and top down concluded—and this will be something which eVectively, because we have to find these savings Q56 (18.07.07) Mr Drew: Just to conclude on this, through the CSR period, and we have said this to what are the possible penalties, besides obviously staV—we will be getting even smaller, because we your reputation which you would like to keep intact, have got to find the administrative cuts. Probably for on the Department if you do not deliver the Gershon a department like ours, if we want to do the things savings and actually remove that number of civil that ministers want to do, if we want to be able to servants? Also, particularly, what would happen respond to Members and events, we are looking for because there would be a real addition to budget if a department which, as I say, with the five, five and you are not able to get the numbers down in the way five per cent reduction is yet a few hundred smaller in which you wanted to? What sort of knock-on than the 3,100. So we have done a bottom up eVect would that have? analysis like that, but unless you want to become like Ms Ghosh: I do not for one moment underestimate a think-tank rather than actually delivering some the reputational eVect because to be an eVective stuV, putting through bills, answering MPs’ department in Whitehall you have to show that you correspondence—and other departments have done can—this is another of our licence to operate areas, similar theoretical work—that is about the actually, to get our finance under control, as Stephen minimum we think we could get to without described, to get our head count under control. That significantly changing. If you asked us a question is the licence to operate and the Treasury will not about bee health, for example, we would just say, look kindly on a sort of policy wheeze if we cannot “Sorry, we don’t do bee health any more.” We do do run our basic systems well. We are assuming very bee health, I hasten to add, but politically there are little in terms of managing our budget for this year some things where you have just got to have some in terms of pay reduction, pay bill reduction coming capacity. out of VER/VES, but if we were to end up going in to CSR 07 with more people than we need we will have Q59 (18.07.07) Mr Gray: I am glad to hear you have simply to take forward those administrative cuts, done that minimising analysis, but do you not think and more, into the CSR 07 period. Of course, if we there is a sort of culture across the whole—not overspend in any year the Treasury, quite rightly, necessarily particularly Defra—which is actually V simply takes it o your budget for the following year sort of empire building and is seeking to keep the and it would have a damaging eVect on programmes. army as big as you possibly can within the I put it as my number one objective in my constraints the Treasury sets down? How do we set performance agreement with Gus O’Donnell. about having an entirely diVerent mindset, which is to say, “Let’s get as small as possible. Let’s beat the Treasury. Let’s exceed the Treasury’s expectations”? One thing you Q57 (18.07.07) Mr Gray: Has that ever happened? mentioned—I am no accountant—reminded me of Ms Ghosh: In a sense the work we did—and I hasten the old days. I remember the day I arrived at the to add we talked to and involved the departmental Department of Environment in 1992, when I think trade union side in this—was almost that. If we are you were there briefing on housing matters, and one completely successful, for example in influencing of the things we were briefed on, I remember, was V citizen behaviour—we were looking at the relatively that the total sta of the Department of short-term, but you could say in ten years’ time if Environment then was, strangely enough, 12,500, you have cracked climate change, if you have which is the exact figure you mentioned. reformed the CAP, if we have got a wonderfully Ms Ghosh: It is not the same 12,500. healthy economically successful farming industry, you would not need a Defra actually, you could Q58 (18.07.07) Mr Gray: Indeed not. Of course it is shrink, but given those big things we have got to not. But I remember the second briefing that deliver over the next few years we think the kind of morning was—and I think it was in the aftermath of figure we came to is about right. the Heseltine changes, if I remember rightly—I was told that of course that is far too many and it was Q60 (18.07.07) Chairman: A great headline: ““Defra very, very important that we should spend the next finished in ten years”, says Permanent Secretary”! year in reorganising the entire Department of Ms Ghosh: Yes. It may not have a raison d’eˆtre. We Environment. The truth of the matter is that you can all move to something else. have fiddled around here and you have made 200 oV there, and all that sort of thing. Surely we need to see Q61 (18.07.07) Chairman: This is between us, of some really significant reorganisation of the course! Mr Park, what actually is the number for Department and we have not seen any, you know, eYciency savings you are supposed to post by decent numbers, decent savings? March 2008? 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Mr Park: Forgive me if I just refer to my notes. Q67 (18.07.07) Chairman: Let us have the note, because otherwise I could spend time that we have not got probing something which neither of us can Q62 (18.07.07) Chairman: No, you go ahead. I have got a number, so I want to see if your number ties in actually answer. with my number. Ms Ghosh: I think we did send you some interesting Mr Park: The number agreed in the SR 04 material in the follow up note about the settlement is for financial eYciencies of £610 million Environment Agency. In the case of the by April 08. Environment Agency you can specifically see that they have provided flood protection, for example, to more homes for the same price and I think that is the Q63 (18.07.07) Chairman: We are both on the same kind of example I mean. For the same amount of number, so how are you doing? money they have protected more homes and I think Mr Park: A large part of that will be delivered that is the kind of example where you do not get any through local authorities. I do not know whether money out of it, they just manage to achieve more. you have that number as well. The latest forecast is So I think the Environment Agency is a good Y that we will deliver financial e ciencies of over £700 example of that. That did not release any cash. million by the end of 07-08. Q68 (18.07.07) Chairman: I fear I am going to have Q64 (18.07.07) Chairman: You have just alerted me. to break my own golden rule not to go into it. It says I am glad you said it was going to be delivered by in your supplementary to the Committee that the local authorities, because I would like you to explain Government looks at all pressures, including waste to me how this is going to be done when on page 37, and local government when setting the overall level chapter 4 of your report, under “Issues”, it tells me of funding for the local authorities. “Considerable that local authority waste management costs are investment has been made in local government, an rising steadily, and yet the source of your savings— increase in overall grant accounts of 39 per cent.” So and I thought there was something like £630-odd that implies that there is actually more money, million, but whatever the number is—is supposed to because Defra also provides other support to local come from more eYcient local authority waste authorities? strategies. So could you tell me how the circle is Ms Ghosh: Yes. squared, because I do not understand how you can get a saving of the order of magnitude you have just Q69 (18.07.07) Chairman: It talks about that and yet indicated against a background where your own we are supposed to be seeing more money to local annual report tells us that that is an area of cost authorities, but less to waste, but it is more expensive increase for local authorities? to deliver the waste strategy according to the council Ms Ghosh: We have discussed this at a previous assessment? session and I think we need to nail it by giving you a Ms Ghosh: Exactly, so this must mean that is a line detailed note. The first thing I would say is that it that sits better than it would otherwise have done, must be true, within the terms of the Gershon but we will come back to you with a note. exercise, because these figures are audited both by the NAO and by the OGC. I suspect the answer to Good. Now, where is the your question is against rising prices and against Q70 (18.07.07) Chairman: rest coming from? increased demand it is less expensive than it would Mr Park: There will be savings on the workforce otherwise have been. This does not represent a reductions that we were talking about earlier and declining line in terms of spend. That is my there will also be the relocations from London and understanding, but can I say we will send you a the South East, and a large number of those have detailed note so that we all understand it? already been delivered, or will be delivered by the end of 2007–08. Q65 (18.07.07) Chairman: I would like this, because we have been at this for two years – Q71 (18.07.07) Chairman: Are they really going to be Ms Ghosh: We have, and there must be a simple real savings, because my understanding of the answer, and we will send it to you. commercial property market, for example, is that rental levels have either plateau’d or are coming Q66 (18.07.07) Chairman: There must be an answer down? Sometimes in the provinces they have been on because Mr Park said, with all the authority of the catch-up compared with London and the South Finance Director, that this is where all the money is East. Are these real savings that are going to be coming from and you, with all the authority of the made by the relocation policies that you have Permanent Secretary, are telling me, “We have got embarked upon? to find out how we are going to do it”? Mr Park: I would say, yes. Part of the Renew Ms Ghosh: No, sorry, I think the other thing that is programme is to look at the right size of Defra and very important here is that some of these savings are the right shape of Defra, and that includes, for savings that actually, as it were, help us in the real example, where the finance team is based, which is world. EYciencies, of course, can produce cash, can now largely based in York rather than in London. mean you have freed up money for something else, We are looking at closing some of our sites and those but it can mean against a rising demand you have sites will come on the market either later this done it more eYciently in terms of unit. financial year or early next year. So, yes, there are Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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18 July 2007 Ms Helen Ghosh and Mr Stephen Park relocations that will reduce costs. Where we are able with the Environment Agency) with the Treasury to close down relatively uneconomic sites and move about the level of funding that would be needed, and those people to existing Defra sites, then those do this was very much based around—and that then represent real savings. brings us on to your second point—the predictions, on the basis of risk, climate change and sticking to Q72 (18.07.07) Mr Drew: If we could take obviously our current assumptions about the levels of the issue of the moment, flooding, firstly this protection we would give against the incidences of increase which has been committed, the increase particular hundreds of years. That is how we reached from £600 million to £800 million by 2010/2011. that kind of figure as being one that was appropriate. Does that money come directly to Defra, or does it There are always lots of debates within a limited pot go to the Environment Agency? about where you should make the investment and in Ms Ghosh: No. As with all the money, whether to fact I was in Ludlow yesterday talking to Shropshire our own executive agencies or to the NDPBs, most County Council, amongst other things, and while I of that comes to us through our CSR settlement – was there actually Tenbury Wells was being hit by the same thing. The point they made, and indeed Q73 (18.07.07) Mr Drew: And then goes straight oV Barbara Young has made the same point, was that to the Environment Agency? there it was not the failure of flood defences, it was Ms Ghosh: —and then goes straight oV as a result the sheer volume of water, run-oV from land which after this exercise. If you take the example of last normally could have been able to absorb it but which year, the £800 million figure compares with a £600 could not absorb it because of high water tables and million figure in the year we have just had, we only the fact that it was the middle of the summer. You actually give just over £400 million to that and I could have predicted that if all those circumstances think other money comes to the Environment came together some of the rivers would flood their Agency from other sources, I think local banks, but as Barbara and others have said, the idea government sources. So, as I say, if you take last year that we could build flood defences as opposed to the total budget was £600 million, which Hilary used looking at all the ways we need to manage land, as the base that he was describing to go to £800 position housing and other contributory factors— million, so not all of the £800 million will in fact we have now actually got to think imaginatively come from our settlement but a high proportion will. about how we can respond to that kind of flooding, which is not the traditional kind of flooding, in a Q74 (18.07.07) Mr Drew: Without trying to reprise more successful kind of way. Some of the lessons Mr Rumsfeld’s “known unknowns and unknown learnt—and Hilary has announced the first phase of unknowns,” this is something which is going to be that about the immediate response, but going pretty well in a sense predictable in terms of the forward and thinking with the EA about where we additional monies that will be required? invest, how we invest and how we use risk is Ms Ghosh: Yes. something we need to do.

Q75 (18.07.07) Mr Drew: Two questions. Firstly, Q77 (18.07.07) Chairman: What I think would be you know that you are going to have to find more quite helpful for the Committee is to have a rather resources, preferably within the pot of Government? more detailed note on the phasing of this extra Ms Ghosh: Yes. expenditure, because it is not clear to me whether in fact you are going to spread the additional £200 Q76 (18.07.07) Mr Drew: So you have got to bargain million in a wise and neat sort of amount over the pretty hard at the CSR because this is something that years or whether there is going to be a sort of Big would not be acceptable if you were not to bargain Bang spend at the end of the period. Can you help us hard. But secondly, you have a dilemma inasmuch as with that? what is happening today is that the more extreme Ms Ghosh: The answer to the question is that we places of flooding are clearly in complete need of have not yet had that discussion with the substantial sums of money and unless you can Environment Agency and it has not yet been increase the size of the pot the money has to come decided. There will be some element of phasing, but from within existing budgets. There is a lot of we need again to look at it alongside the other V evidence that money has now been siphoned o demands on the Environment Agency and other from areas which are less critical but potentially in delivery bodies. It will be a rising line, but we need need of protection, because we all know what to discuss exactly how the phasing works to make happened this time was that it hit the areas which sure that it is aVordable and sustainable. were not the traditional areas in the main, it hit new flood plains, and maybe if the money had been allocated in slightly diVerent ways at least some of Q78 (18.07.07) Chairman: Bearing in mind the point the misery could have been prevented. So how do that you were making a moment ago, could you also you cope with those two issues, the fighting for the break that down in terms of the sourcing, because CSR amount and then the reallocation within the figure 19 on page 102 perhaps gives a flavour of the existing budget? diVerent sources and the impression is being given Ms Ghosh: To take those broadly in order, the that it is Defra that funds the whole shooting match, announcement that Hilary made is the result of but you have just made the point that out of the £600 highly successful discussions (by the Department million, £400 million is the Defra spend? Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 33

18 July 2007 Ms Helen Ghosh and Mr Stephen Park

Ms Ghosh: Yes, the line that you can see there, the Ms Ghosh: And that, as this Committee has top line, is the 400. discussed, is largely because they had chosen a diVerent system. Our objective will be to make the payment as early as possible in the payment window Q79 (18.07.07) Chairman: If you are going to move and that is what we are working towards. up to £800 million it would be very interesting to know what, of the extra, is coming from the Defra budget and what is coming from everybody else, Q84 (18.07.07) Mr Williams: In other words, to get because I am not entirely clear. to the situation where English farmers are not Ms Ghosh: No, and indeed how it comes through the second-class citizens within the Single Payment local government settlement is also part of that, so Scheme? we will break that down. Ms Ghosh: Absolutely. Chairman: That would be very helpful. Mr Williams: Thank you.

Q80 (18.07.07) Mr Williams: If I could move on now Q85 (18.07.07) Lynne Jones: A little earlier when really to the old chestnut of the Rural Payments you were asked what were your incentives to achieve Agency and the Single Payment Scheme. We were the headcount target you said because you had got told during our inquiry by the Chief Executive, Tony to do it. There are lots of “We’ve got to do it” in Cooper, that his objective was for the Single relation to the RPA and the delivery of the Single Payment Scheme to be stable by 2008. Do you still Payment Scheme and the threats of disallowance, expect that to be the case? but that did not lead to achievement, so I did not ﬁnd Ms Ghosh: We have done, as you know, much better it very convincing to say that just because you have this year but not as well as we should have done, got to do it you will achieve it. particularly in terms of customer service. We had Ms Ghosh: There are very many diVerences between paid out 98% of the money by the end of June. We achieving a headcount reduction and delivering a have recently set and I think announced to highly complex project like the RPA. In some senses Parliament his targets for what would be the 2007 it is a very clear objective. We have experience from scheme, to have paid 75% by the end of March and other departments. I have been involved with similar I think 90% by the end of May. So we are setting him schemes in other government departments. We have tight targets for next year and we are hoping that by had lots of discussions both with the trade union side 2008 we will be able to bring that target back even and with colleagues in the Cabinet OYce about further towards December, which we know is the experience. Running a VER/VES scheme, engaging preferred date of the farming community itself. So with staV and giving projections about how we will we think it will continue to get better. Whether it will achieve our headcount reduction is a pretty well- be a performance by the 2008 scheme which worn project process. I think what we have lacked completely meets what farmers want or not, historically is that ﬁrst of all we were thrown oV obviously we will work hard for that. course by events at the RPA, but it seemed a long way away at the beginning of the SR 04 process. There were lots of policy pressures on us. In fact, we I do not quite Q81 (18.07.07) Mr Williams: acquired people rather than lost people in the early understand what “stable” means in this context. stage of the SR 04 process. I can assure you that Ms Ghosh: It means that we can say, “This is when alongside a very good project plan and an almost we are going to be able to pay you, and we will be day by day set of milestones our minds are able to pay you on this basis at this time every year, wonderfully concentrated. and we will be able to give you a decent level of service. So you will be able to ring us and get somebody who understands your claim and who will Q86 (18.07.07) Lynne Jones: There were proposals reply to your letters, what you would regard as a to reduce staV as part of the change programme in decent customer service.” the RPA, but you said something about the RPA not being touched, so what is the situation with staYng at the RPA? Q82 (18.07.07) Mr Williams: But even if you brought it back to December you would not be Ms Ghosh: The agreement that I have with Tony meeting the same type of delivery that other Cooper is that what he is doing at the moment—and devolved nations? this is partly in response to comments from Ms Ghosh: I do not know whether you can pay committees such as this one—is making the maximum use of permanent staV wherever he can. before December, but the payment window is Y December of the year to June of the following year. He is maintaining the overall sta ng levels, and I think some people were paying in advance, but I do indeed he takes on casuals for some peaks of work, not understand how you can within the EU but on the whole he is maintaining levels and the deal Directive. is that through the CSR 07 period as the organisation becomes more stable we will be able to take the headcount and administrative savings out Q83 (18.07.07) Mr Williams: On 1 December many of the RPA, but we will not do that until we are sure countries were able to put out full payments. we are on track for stability. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 34 Environment, Food and Rural Affairs Committee: Evidence

18 July 2007 Ms Helen Ghosh and Mr Stephen Park

Q87 (18.07.07) Lynne Jones: Are ultimately the the evidence to the Commission as to any apparent targets from the original change programme what failings were justified because of certain cases. As I you are still going to try and achieve? say, it is really a question of mounting a robust Ms Ghosh: No department, including our own, has defence to make sure that it saves the taxpayer the headcount targets for the CSR 07 period. What we money. have is the five per cent, five per cent, five per cent administrative cost target, so that is what we have to achieve. One element of that will be reducing Q92 (18.07.07) Mr Williams: Is this adding a deal of headcount and getting ourselves in the right shape pressure to the Defra budget? for the future. Ms Ghosh: Insofar as we need to make provision for it in the CSR, in that sense it does. In fact in our historic and going forward baseline, the baseline Q88 (18.07.07) Lynne Jones: And some very important functions that you have still got to that will be, as it were, phrased in the CSR, we have achieve? some provision for disallowance just for historical Ms Ghosh: And some very important functions, reasons. The question is, do you need to add more to particularly in the licence to operate areas, that we that, the kind of disallowance that might arise still have to achieve, so that is what we will be doing, through the period? So it is a pressure to build into but we are not tied to a specific headcount reduction. CSR 07.

Q89 (18.07.07) Mr Williams: Lynne mentioned Q93 (18.07.07) Chairman: I think again this is an disallowance and you have given us a figure for a area where a note may be called for, because we have provision for disallowance for the 2005 and 2006 looked at the provisioning for disallowance and we scheme. At what point will the cost of any appreciate that you have to estimate a worst case disallowance be met by Defra itself rather than the scenario, but I am not clear whether the Treasury Treasury? has given you additional money to cover this against Ms Ghosh: It is all now on our DEL. Historically it the previous situation where it was the Treasury that was on our AME, meaning the demand-led bit of paid the Department, because either you are going Government accounts. So from now onwards—and to find yourself in clover, in theory, if somebody has this even goes back to historical disallowance that given you extra money to cover it, in other words if does not relate to the SPS—it will be on our budget you have got a liability in your books, or if you do and we have to meet it, so we make a provision that not have to pay that does the Treasury claw back the is described and we are working very closely with the extra? Upon that note, I am going to suspend the NAO and indeed with the Commission on whether Committee and adjourn. that was the right figure or possibly too much given Ms Ghosh: We will respond briefly on that when you some of the improvements which have been made come back. since, and one of the elements of the CSR settlement is to make sure we have got the right amount of money, or a prudent amount of money in the budget The Committee suspended from 4.36 pm to 4.50 pm for dealing with disallowance going forward. It will for a division in the House all fall on our budget. Q94 (18.07.07) Chairman: At this point, would you Q90 (18.07.07) Mr Williams: Disallowance on some like to finish your observations? of the previous schemes outside the SPS have Ms Ghosh: I will try and keep it very simple. The already been agreed with the European answer to—I cannot remember whether it was Mr Commission? Williams’s or the Chairman’s question—is that as Ms Ghosh: It is an interesting, as you will know, sort and when the wheels of God have ground in the of dance that goes on. We have not agreed them. Commission and the Court of Auditors and we are There are proposals in the air about some previous told what the actual figure for disallowance around schemes, but they do not add to the 300 provision SPS 05 or SPS 06 we will actually have to find real that we are describing because that related to those money from our budgets, which is why we have to two years. make a forward estimate of that and build that into the CSR. The provision element is very much within Q91 (18.07.07) Mr Williams: But at what point will the sort of parallel world of parliamentary votes, but the Defra budget be compromised? the short answer is that we have to find the money. Ms Ghosh: When we have not final agreement with the Commission on what the final amount is. We are making the provision, looking forward, to make Q95 (18.07.07) Chairman: I think we would like a bit sure we have got enough money to cover what seems more explanation about that because we are not to us to be a reasonable amount. Stephen, do you clear as to whether it is coming out from an already want to say a little bit more about the way we are agreed global total or whether the Treasury gave for trying to work through that? this current financial year some additional funding Mr Park: It is really a question of making sure that to cover because, as I say, previously it had appeared we can mount a robust defence in terms of why the to the Committee that it was the Treasury that met performance of the RPA over the last few years has the bill. So perhaps given that there are two financial been what it has, and making sure that we can give years’ worth of disallowance provision – Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 35

18 July 2007 Ms Helen Ghosh and Mr Stephen Park

Ms Ghosh: Yes, we will describe how that rolls out. Q99 (18.07.07) Lynne Jones: Yes. It is another of We do not get extra money from the Treasury, as we your targets where you say you have got slippage. would have done in the old days under the AME What are the findings of the Fifth Annual Fuel system, but we have some built into our baseline. Poverty Progress Report? They have not been Chairman: I am conscious that we have nine minutes published yet, but presumably you are aware of what left and Madeline Moon has come back specially to is happening on that front? ask you a question about your PSA agreements on Ms Ghosh: Yes, indeed, and this is an area clearly Sites of Special Scientific Interest. where we need to be extremely clear about how we take our strategy forward into the CSR 07 period. Q96 (18.07.07) Mrs Moon: I am aware that the PSA Really to rehearse what has happened so far, we requires you to have 95% of all nationally important have been spending more each year on Warm Front, wildlife sites in a favourable condition by 2010. We which is one of the levers we had. I think we spent seemed to be missing the target in May of this year. £800 million over the period and £350 million this We are down to 75.4% when we should be at 78 per year compared with the £300 million last year. That Y cent. How do you feel you are going to be on course has actually improved fuel e ciency for about 1.4 for March of next year? Do you see yourself being million households. At the beginning of the SR 04 able to get to 83% then? period we were doing very well, as the report says, in Ms Ghosh: For the reasons I think we set out in the terms of lifting people out of fuel poverty. The original report itself, yes, there was some slippage increases in energy prices in 2005 and 2006, frankly, against the milestone. For a variety of reasons, some have pushed some people back in again and having around the organisational change at Natural got the group down to about one million, we England, some around other pressures on the probably think it has doubled again since then. So it Environment Agency, we slipped slightly. We are is a target which is moving away from us, which is picking up again, so I think by July this year we were why we have consistently targeted it as red. As I said, back up to 75.5. We are confident—and this is very it was a red performance. We have done two things V much talking to the Environment Agency—that we to kick o the sort of process for how we take this will be able to recover that this year, and that is a into CSR. We clearly need to engage other relevant combination of focus from Natural England, the departments because it is not just a question of monies coming through under the ELS and HLS and Warm Front money going in, it is also issues about co-operation with many of the owners and with the fuel prices themselves and it is a question about Z Environment Agency. So we are confident that this income. So before the reshu e our ministers had a is a PSA which is on track. meeting with all the ministers from the relevant bodies, other government departments, Health and DWP in particular, and colleagues in DBERR, who So you feel that part of Q97 (18.07.07) Mrs Moon: obviously sponsor the energy industry, and said, the problem lies with the Environment Agency? “What collectively can we do about this?” Hilary Ms Ghosh: It is just the case that in some of the SSSIs Benn is also very keen to take that up because he sees there are issues that are also part of the Environment that this is a very key issue in terms of social equality Agency’s remit, whether it is about water and poverty issues, and we will need to stick together management or whatever it may be, and I know that a sensible package. It is not just a matter of putting Barbara Young and Helen Phillips are working more and more money into Warm Front because it closely together on these. It is not a clash, it is simply could be that we put lots of taxpayers’ money in that we need to make sure that they are co- there and fuel prices move away from us. So we need ordinating well together, and I think that is all going to have a really consolidated cross-Government ever better. action on this, but we are taking it very seriously. There are many Q98 (18.07.07) Mrs Moon: The Warm Front environmental organisations who would argue that Q100 (18.07.07) Lynne Jones: programme, is that ring-fenced within your budget? perhaps the problem is much more around the Ms Ghosh: It is currently ring-fenced within our financial problems in Natural England and the budget, yes, and the Chancellor has announced year problems with their budget and the management of on year increases. their budget. How would you respond to that? Ms Ghosh: Again, we have talked to Natural England and the Environment Agency, but in Q101 (18.07.07) Lynne Jones: There was £300 particular Natural England on this. In fact, we million over however many years, and that was discussed this, I think, at the Departmental Report based on profits from extra money coming in from hearing last year. The funding reductions we were taxation of North Sea oil profits? unfortunately required to make in the middle of the Ms Ghosh: Yes, and it continues to be ring-fenced. year and the money they oVered to us was not mainly In the SR 04 period it is ring-fenced. coming out of this pot. It did not mainly impact on this. There was some small element where it Q102 (18.07.07) Lynne Jones: So you are not looking impacted on this, but in fact they were able to find for cuts in that budget, but the current, in historical funding from other pots around access, for example. terms, high budget may not be maintained? So it had a small impact, but not a large impact. Ms Ghosh: It is one of the issues that we need to Chairman: Lynne, you have got five minutes on discuss in the CSR settlement period. 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Ev 36 Environment, Food and Rural Affairs Committee: Evidence

18 July 2007 Ms Helen Ghosh and Mr Stephen Park could be made by Warm Front, by thinking about increase for ever in order to achieve this and what we fuel prices, by thinking about incomes and decide are working on at the moment is a strategy which which is the best way to achieve the targets. means that you know what your projection will be and what the value for money contribution from Q103 (18.07.07) Lynne Jones: But all those other – Departments that you mentioned you are working with, they are all going to have constrained Q106 (18.07.07) Lynne Jones: There is always more Y settlements in terms that they are not priorities? you can do in terms of the energy e ciency of homes Ms Ghosh: Yes. because the programmes under Warm Front are not really achieving very high standards of energy eYciency. Q104 (18.07.07) Lynne Jones: So you have got now until 2010 to achieve this target of eliminating fuel Ms Ghosh: And that is what we need to take into poverty and you have now got 2 million people, so is account, with what sum of money, targeted how, it achievable? Have you got the policy instruments to and what kinds of outcomes, could you achieve the achieve it, or is it just that you are scrapping these fuel poverty targets? That is what we are doing. targets and it will be subsumed into the climate So you are determined change? Q107 (18.07.07) Lynne Jones: to achieve that target? Ms Ghosh: We are certainly not scrapping these Ms Ghosh: It is a statutory commitment. targets. We cannot ignore this target, as you know, because we have a statutory obligation under the Q108 (18.07.07) Lynne Jones: And will you be Act, whose name temporarily escapes me. We producing some kind of strategy as to how you are cannot avoid this, so we are extremely focused on it. actually going to achieve that? It will still be one of our set of targets for the CSR 07 Ms Ghosh: We will indeed be doing that once we period. Until we have a CSR 07 settlement and we have a CSR settlement and, as I say, Hilary Benn is have had these discussions with other departments, devoting a lot of personal attention to this. we cannot say, “This is the amount that we want to Chairman: We promised to let you go. We do have spend through Warm Front. This is what we will do some more questions. Just to give you notice of what on energy,” whether it is through working with you will get a letter about, we will want to touch on Ofgem and the companies, whether it is thinking IT, payments to the Rural Payments Agency. Where about more metering and other things, or whether has the extra money come from to fund further IT we also need to bring in the question of income, developments within your budget? Why are you because obviously incomes and so on is a crucial spending £260 million on consultants and only £300 determinant. So we need to see what all those three million on the entire rural development programme? things can contribute. There is an interesting juxtaposition there. We will want to talk about the enhancing opportunity of Q105 (18.07.07) Lynne Jones: But surely in terms of rural England PSA Target 4. We have touched on your input into the Comprehensive Spending fuel poverty. There will also be some further PSA Review you have a strategy saying, “Look, because target questions and some smaller ones which aVect it’s a statutory target we’ve got to be able to meet animal health and welfare, and indeed disease this. Here is our strategy, and that requires X preparedness by the Department. So thank you very expenditure”? much for coming. I am sorry that we cannot have Ms Ghosh: That is what we are doing, but we need any more time, but I am afraid the divisions have got to do it with other government departments. One in the way. We did promise we would let you go at issue, of course, is that over a period of time you will ﬁve o’clock, and may we thank you and Mr Park for actually have carried out your eYciency works in the your answers to date and we look forward to your houses of vulnerable households, so you would not further contributions in correspondence. Thank you expect, for example, spending on Warm Front to very much.

Memorandum submitted by the Department for Environment, Food and Rurral AVairs

DEFRA’s 2007 DEPARTMENTAL ANNUAL REPORT

Response to the Efra Committee’s preliminary questions (Part Two)

PSA targets PSA Target 1: Promoting sustainable development Pages 30–31 of the Departmental Report state: Those measures showing deterioration since 1999 are speciﬁcally: aviation emissions of greenhouse gases, fossil fuels used for electricity generation, nitrogen oxide emissions from electricity generation, carbon dioxide emissions from: households, private vehicles and road freight, energy supply...,water loss through leakages, household waste arising, extent of sensitive areas aVected by excessive nitrogen Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 37

from air pollution, robbery, infant mortality gap (between highest and lowest rates), childhood obesity, walking and cycling, children walking to school, ozone pollution in urban areas, and households living in temporary accommodation.

1. What main action is the Department taking to tackle under-performance in those measures showing deterioration on pp 30–31 of the Departmental Report, in relation to PSA Target 1 (Promoting sustainable development)? The indicators underpinning the sustainable development strategy as a set are designed to measure how Government as a whole is doing in making a reality of sustainable development. Action on individual issues, such as greenhouse gasses and air pollution, is described elsewhere in the Departmental Report. In other areas, such as robbery and childhood obesity, other Departments lead. Defra’s contribution in these cases is to ensure that its policies are joined-up and make best use of synergies between policies (eg links between tackling obesity and access to the natural environment and green spaces). As champion for sustainable development in Government, Defra takes the following further actions to contribute to moving the indicators in the right direction: — Supporting Government-wide development of mechanisms to enhance sustainable development considerations in policy-making: eg by working with HM Treasury to mainstream accountability for sustainable development across Government in the Comprehensive Spending Review 2007 and with the Better Regulation Executive to ensure that sustainable development considerations are strongly represented in guidance on Impact Assessment (including a new greenhouse gas test for all policy proposals); — Sponsoring the Sustainable Development Commission to work as an independent advisor, advocate, watchdog and capacity-builder across Government, in its in-depth reviews, for example, on the Sustainable Communities Plan and with Ofgem scrutinising economic, social and environmental aspects of Government policy and making recommendations for improvement; — Managing governance arrangements to ensure implementation of the Sustainable Development Strategy and to create greater policy-cohesion. The Sustainable Development Programme Board, for example, considered contributions across Government to the sustainable schools agenda; and — Working with regional, local and voluntary organisations to ensure that sustainable development in their actions too, for example, through the tasking frameworks for Regional Development Agencies and Government OYces, the new place-shaping guidance for local authorities and the £4 million initiative Every Action Counts, which unlocks the potential of the third sector to deliver sustainable development.

PSA 3a: Reversing the long-term decline in the number of farmland birds A Defra newsletter from Spring 20077 noted regional variations in farmland bird numbers: in particular, “a marked north-south diVerence in population trends” with numbers falling in the south of England but increasing in the north.

2. What is the Department doing to address regional variations in the number of farmland birds? The regional birds data are published separately to the PSA data on farmland birds and give an overview of population changes over the last 12 years. The regional data are not as statistically robust as the national data (because of the smaller sample sizes) and, therefore, trends and changes in trends need to be viewed with caution. The Department is not directly addressing regional bird numbers as part of this PSA. The PSA target is used as a proxy indicator for the general health of the wider countryside (the land outside of valuable wildlife sites such as Sites of Special Scientific Interest and National Nature Reserves) rather than being used as a direct measure of farmland bird populations per se. Our main delivery mechanism is Environmental Stewardship, particularly Entry Level Stewardship, and our aim is to increase the environmental performance of the majority of farmers through the widespread uptake of a range of environmental options (many of which will benefit farmland birds). Additionally Higher Level Stewardship provides locally targeted environmental management which will benefit declining farmland bird species and other farmland wildlife.

PSA 5: Sustainable farming and food Page 44 of the 2006 Autumn Performance Report (APR) reported slippage because Defra was “behind the [gross value added] element of the target”. Page 45 of the APR shows a 2005 ratio of 1.18 (UK compared with EU) with an accompanying graph of “GVA per person UK compared with EU” since 1990. The 2007 Departmental Report says that the target is back “on course”.

7 http‘//statistics.defra.gov.uk/esg/publications/regstatsnews/Final%29Spring%202007%20Newsletter.pdf Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 38 Environment, Food and Rural Affairs Committee: Evidence

3. Can the Department provide (a) the latest ﬁgures for the Gross Value Added (GVA) ratio per person in the UK compared with EU and (b) an updated GVA ratio graph, similar to the one shown on page 45 of the 2006 APR. (a) The latest estimates for the indicator show an 8% increase in the ratio in 2006 up to 1.34, back to close to the trajectory. (b) GVA chart

H1 GVA per person UK compared with EU 1.5

1.4

1.3

1.2

Ratio of UK (adjusted) to EU 14 1.1 GVA per head

Trajectory & target 1.0 1990 1995 2000 2005 2010 Source: Defra, Eurostat

PSA 6: Waste and recycling

Page 50 of the 2006 APR said that the 25% recycling/composting rate by 2005–06 had been met, although the ﬁgures had not yet been audited. The 2007 Departmental Report does not provide any further information about whether a full audit of the ﬁgures has now taken place.

4. What steps has the Department taken to ensure that the 26.7 household waste recycling/composting ﬁgure for 2005–06 has been independently audited or validated?

On meeting the 2005–6 target, we believe the confusion is largely a matter of timing around publication of the reports. The Autumn Performance Report used a provisional assessment of meeting the target based on the unaudited Best Value Performance Indicators. For the 2007 Departmental Report we used the final WasteDataFlow survey data and so didn’t comment explicitly on the “auditing” process. WasteDataFlow is the web based system for municipal waste data reporting by UK Local Authorities to government. The 26.7% household recycling figure is based on local authority returns made to WasteDataFlow and published as part of a National Statistics release (see http://defraweb/environment/statistics/wastats/ bulletin.html). The returns to WasteDataFlow are subject to the following 3 stage validation process. (i) Defra’s contractors liaise directly with Local Authorities to validate each individual return to a set of range and variance checks; ( i) the Environment Agency monitor and audit the data for the Landfill Allowance Trading Scheme; and (iii) Defra checks and analyses the data to National Statistics standards and protocols.

The NAO recently undertook a detailed audit of the data systems for PSA 6 and rated the system as ﬁt for purpose.

Page 42 of the Departmental Report says that Defra paid out £105 million to local authorities in 2006–07 under the Waste Performance and EYciency Grant programme. A further £110 million will be provided during 2007–08 and will be administered by the Department for Communities and Local Government as part of its Local Area Agreement (LAA) fund. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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5. How will the additional £110 million provided during 2007–08 under the Waste Performance and EYciency Grant programme be appropriately targeted by the Department to ensure it achieves its 2007–08 goal that all local authorities must at least equal their 2005–06 targets and meet the minimum level of 20%?

The Waste Performance and EYciency Grant has been allocated to local authorities using a simpliﬁed version of the formula used in the Environmental, Protective and Cultural Services (EPCS) block. This strips the formula down to the core driver for waste spend, population, adjusted to take account of commuters and day visitors, as well as the relative costs of waste operatives’ wage costs. The latest available Revenue Out-turn data are used to ascertain the proportion of waste spend occurring at waste collection and disposal authority level, and therefore the proportion of the Grant that should be allocated to each level. Each local authority in England is allocated a portion of the grant according to this formula, a full list of is available on the Defra website at: http://www.defra.gov.uk/environment/waste/localauth/funding/index.htm. The grant is unringfenced in accordance with the Government’s policy of giving local authorities freedoms and ﬂexibilities. In 2007/08 the grant is being paid to local authorities through their Local Area Agreements. It is for local authorities to decide how to invest this funding to achieve their local objectives and obligations.

PSA 8: Improving air quality

Page 22 of the Departmental Report says that objectives for benzene, 1,3-butadeinie, carbon monoxide and lead in the air quality target were met throughout the UK in 2006 and Defra is meeting current objectives for all air pollutants in most parts of the country. However, Figure 7 on page 27 of the Departmental Report shows that Defra’s expenditure on this target (just over £8 million in three ﬁnancial years) relates to monitoring, such as equipment and associated costs of operation. It remains unclear how Defra itself has been directly responsible for improving air quality.

6. What has the Department done that can be directly associated with the reductions in air pollution identiﬁed on pp 22–25 of the Departmental Report, in relation to PSA target 8?

Improving air quality is one of Defra’s key environmental aims and a number of the Department’s policy areas contribute to signiﬁcant reductions in air pollution in recent years.

We have led negotiations in Europe and international fora, such as the new air quality directive, the large combustion plants directive and the review of the National Emissions Ceiling Directive, all of which result in national and transboundary reductions in air pollution. We have implemented several EU directives which have cut harmful emissions to air, including the solvents directive, sulphur content in gas oil and petrol vapour recover regulations.

Defra has steered the phased implementation of the IPPC Directive with the Environment Agency and local authorities which sets tighter controls over emissions from a wide range of industrial processes. We have also been working to ensure that local authority regulation of other industrial processes is eVective and that measures to reduce emissions are kept up to date. Implementation of waste licensing controls and measures under our waste strategy to control and reduce waste combustion have also helped reduce emissions to air.

Local authorities are key delivery agents for tackling air pollution at the local level and Defra work closely with them to help them achieve this providing central support services and guidance. In addition, Defra’s annual air quality grant programme, and its predecessor programmes, have since 1997 provided local authorities with over £33 million to support capital expenditure associated with their statutory duties for Local Air Quality Management, including local projects to improve air quality at local level, for example feasibility studies for low emission zones. DfT funding under the last round of Local Transport Plans included an element to support local authorities’ air quality traYc management improvement works.

The Department for Transport are responsible for many of the policy levers which can help reduce emissions of pollutants. Road transport is responsible for up to 70% of air pollution emissions in urban areas, which is why we share the PSA with DfT. Defra maintain close links with DfT and have been instrumental in developing and supporting implementation of transport policies which impact on air quality. For example, negotiations on Euro vehicle emissions standards are providing signiﬁcant reductions in the PSA’s pollutants. Further reductions will be achieved under Euro 5 and 6 standards which have just been adopted.

Additionally, our environmental policies, including for air quality, are developed with consideration for their impact on climate change. Recent reviews of the Air Quality Strategy and Climate Change Programme have both looked to identify measures which could have co-beneﬁts. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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7. How does the Department intend to achieve the targets for nitrogen oxide and particulates (PM 10)? We are achieving, and projecting to meet, the targets for nitrogen dioxide (NO2) and particles (PM10) in the majority of the country— up to 99.5% in some cases. But we recognise that meeting these in all parts of the country will be very diYcult—if not impossible in some cases. This problem is faced by most other Member States in Europe who will also be unable to meet corresponding EU air quality limit values. This has been recognised by the Commission and the draft directive, currently under negotiation, would provide Member States with several more years to meet the targets. The recent review of the Air Quality Strategy identiﬁed additional policy options which, if implemented, would give signiﬁcant gains in public health, reduce the number of areas of exceedence of the PSA’s objectives and move us closer to their achievement. We plan to publish a revised Air Quality Strategy this summer.

Biodiversity Page 49 of the Departmental Report says: “The review of the UK’s list of priority species and habitats on scientiﬁc grounds has been completed”. The Biodiversity Action Plan website, however, states: Targets have been revised for all terrestrial, freshwater and coastal habitats and for most species. A notable exception is the targets for most marine habitats and species. The revision of these targets, together with those of the few terrestrial species for which no revised targets were submitted, will await completion of the priority species and habitats review. (http://www.ukbap.org.uk)

8.When does the Department expect the priority species and habitats review to be completed? The review is now complete and was published on 6 June at the link above. The next stage will be to invite Ministers of all four UK administrations to approve and adopt the list. Department for Environment, Food and Rural AVairs July 2007 Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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Annex B

SHARED SERVICES TRANSFORMATION PROGRAMME DEFRA SECTOR PLAN

1. Purpose of this Document The UK Public Sector consists of over 1,300 organisations including Departments, NDPB’s, Agencies, Local Authorities, Police, Primary Care Trusts, etc. To co-ordinate the shared service discussion and facilitate the adoption of shared shares across Government, these 1,300 organisations have been split into groups, referred to as Sectors. Organisations have been aligned to a Sector for their similarities in areas such as objectives, funding, governance, service delivery, operations and scale. There are nine Sectors for which shared services plans are being produced. These are Defra, Education and Skills, Central Government, Local Government, Health, Revenue and Customs, Work and Pensions, Defence, Government “family” groupings, the Rest of Central Government. This paper sets out the plan for shared services for the Defra group of organisations, the Defra Sector.8 The Defra Sector Plan will outline our strategic intent with respect to customer take up, aligning current and future development of shared services initiatives across the Defra family and others to provide a framework that will: — optimise the return on investment made to date; — outline new investment already committed; and — guide future investment decisions. This is a living document that will evolve over time as the landscape changes, as decisions are taken and as new information becomes available.

2. Guiding Principles The Defra Sector Shared Services Programme Board is focused on achieving outcomes and beneﬁts for businesses through the transformation of support services. Our vision is that the Defra “Family” Shared Services organisation (SSO) will be able to diVerentiate themselves and their services by focusing on the end customer rather than just eYciencies. By focusing on the “product” and oVering to the family customers, the shared services organisation will add “value”, in the customers eyes, over and above what businesses believe they can deliver alone. By putting our customers at the heart of our sector plan we are recognising their business needs and identifying ways in which our expertise can support and deliver what they require. Our uniqueness will be in the design, delivery and support of the interface between the “internal customers”9 (corporate services) and the external customer (the front-line).10 Customers have increasingly sophisticated requirements and demand ever higher standards of service so building better relationships with customers is one way to achieve an advantage, another is to create a conﬁdent, knowledgeable and motivated workforce and rewarding culture. In order to achieve this we need to become entirely focused on customers and their business, our service and employee communication at all levels. Our commitment to customers needs to go deep into our business. At the moment we are spending too much time making sure we are doing things right rather than making sure we are doing the right things. Our approach to creating an organisation for customers means that: (i) Our customer will be able to select products and services because they believe they oVer superior value to their business. To deliver we need to understand their needs and will introduce a “service relationship” element to our organisation. (ii) Our customers will be able to diVerentiate our service from other oVerings because of its simplicity—we will be easy to access, responsive to enquiries and integrated in our delivery. (iii) Through an eVective methodology of continuous improvement the Shared services organisation will be able to develop new services and products that oVer better value (which will require us to focus on performance, costs, responsiveness, channels and price).

8 References to the Defra Sector (DS) refer to: the Defra Family (DF) further described in Section 3.1, and other government departments who may join the Defra Shared Services Organisation. 9 Internal Customers—provision of transactional services to customers (eg invoice processing) to Defra Family, and other central government departments. 10 Front Line refers to the core functions of the departments (eg CSL where the SSO will be key to the development of the agency through the provision of timely/focused management information to support CSL’s science work). Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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(iv) We will need to promote the work that we do to demonstrate and inﬂuence customers that what we do is better than anyone else. This involves providing services in ways that the target audience recognises and promotes and markets the organisation.

3. Scope 3.1 Organisations

The table below sets out all of the organisations (Department, Agencies, and NDPB’s) that collectively form the Defra Family.

Organisation(s) No of FTE FTE Orgns No’s No’s11 Defra Executive Agencies Centre for Environment Fisheries and Aquaculture Science 500 Central Science Laboratory, 600 Rural Payments Agency, 2,500 State Veterinary Service, 1,300 Veterinary Laboratories Agency, 5 1,200 6,100 Defra Executive Agencies (FTE’s ' 500) Government Decontamination Service, Marine Fisheries Agency, Pesticide Safety Directorate, Veterinary Medicines Directorate, 4 500 500 Core Department and Divisions Core Defra, 1 3,900 3,900 Defra Executive NDPB’s (FTE’s ( 500) Environment Agency, 12,20012 Natural England (Countryside Agency, Rural Development Service, 2,800 English Nature), Meat and Livestock Commission, 650 Royal Botanic Gardens Kew, 4 650 16,300 Defra Executive NDPB’s (FTE’s ' 500) Agricultural Wages Board, Agricultural Wages Committee, British 13 500 500 Potato Council, Consumer Council for Water, Food from Britain, Gangmasters Licensing Authority, Home-Grown Cereals Authority, Horticultural Development Council, Joint Nature Conservation Council, Milk Development Council, National Forest Council, Sea Fish Industry Authority, Wine Standards Board Public Bodies British Waterways, 1,900 Covent Garden Market Authority, 2 100 2,000 Total 29 29,300 29,300

3.2 Operating model (Functions)

The current focus for shared services is on corporate services, in particular HR, Finance, Procurement and Estates. The proposed operating model initially addresses the roles of key functions but also looks at shared services being wider than just setting up a centre for transactional activities with its impact being more far-reaching.

Non corporate services have not been considered as part of this sector plan. However, as the shared services organisation matures the opportunity to expand services into Front Line activities will be kept under review.

11 Full Time Equivalents. 12 At this stage it is envisaged that EA will maintain its’ existing corporate services arrangements, however, it is the strategic intent of the Department that by 2010–11 that the opportunity will be taken to integrate the EA and DFSSD operations. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Corporate Services Other services 2

1 Estates Estates Legal TBD HR Finance Procure ment IT

1 IT is already provided under an outsource contract with IBM, and where under the terms of the contract members of the Defra family can “buy into” the contract if they so wish. 2 Defra anticipates broadening its service offering beyond Corporate Service activities which it plans to articulate during 2006.

4. Route Map 4.1 Shared Service Facilities The Defra Sector Board has identiﬁed two primary shared services organisations to support the Defra Sector in the period to 2010–11. These include:

Primary Shared Service Facility Target Organisations served Defra Family Shared Services Directorate Defra Family, and other government departments13 “buying” services from DFSSD Environment Agency14 Environment Agency

4.2 Summary Route Map In relation to the longer term evolution of the SSO, the following route map provides an illustration of the current thinking in relation to a likely migration/convergence path. (It is recognised that the route map also raises a number of issues that need further discussion).

Phase 0 Phase 1 Phase 2

2006 2006/07 2007/09 2010/11 Current Operation Initial Operation Fully Operational

NDPB’s Fully Operational Environment Agency

Others Continuous Natural England Improvement Potential for EA and DFSSD to operate under unified Executive Agencies management Fully Operational

Core Dept / Directorates Short Term Enhancements

Other Departments DFES, DTI, etc

Public Bodies

Departments / Agencies etc which are candidates Departments / Agencies which will provide to move in to a shared service operation shared service operations

Work on the detailed route map is underway and will continue for sometime as the concept of an “intelligent customer” and “educated service organisation” are developed/implemented.

13 Includes DFES and where appropriate other central government departments. 14 EA is currently considering the best way forward in respect of the delivery of its back oYce functions. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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For the Shared service organisation some very practical issues have to be worked through to ensure an eVective customer migration plan is jointly pulled together and key questions that help us include: — Where does duplication already exist across the current service provision? — What sources of information exist in the customer organisation? — What is the current corporate service provision within the customer organisation? — What is the current management information within the customer organisation? — What are the current costs of delivery? — What are some of the current performance indicators? — What is the current investment cycle?

In turn, a number of principles need to be defined and agreed by the customer organisation in order to complete any migration plan: — ensure that the rate of transition is one which the organisation can absorb the changes and embed them into the business; — ensure that the rate of transition is one which minimises disruption to the on-going business operation and services; — ensure that the systems are delivered in a timely manner and do not become the sole determining of when to make the transition in the respective customer business; — minimise the need for dual working (old and new processes/systems concurrently); — group the activities that go-live together based on where they impact the same process and or groups of people; — progressively bring in the flow of benefits; — transfer of knowledge to and from the customer organisations; — Progressively rollout to the organisations, each moving in turn to be supported by the shared service organisation; and — capturing the learning from earlier work and applying it to the next phase of work.

5. Outcomes

The Defra Shared Services Sector Plan aims to deliver the outcomes set out below by 2011.

General Outcomes: — more easily accessible and responsive support services; — Greater co-operation and sharing of best practice through the use of agreed indicators including upper quartile benchmarks; — improved accountability at all levels throughout organisations; — better management of customer service and customer expectations; — continuous improvement in service delivery; and — better management information to support organisations own business eVectiveness.

Speciﬁc Outcomes: — delivers an operational shared services organisation by end 2006; — delivers operational improvements which enable upper quartile benchmarks to be delivered by 2010–1115; and — seen by other central government departments as an exemplar shared services operation from where to “buy” services where the preference is from a central government provider.

15 Upper quartile benchmarks to reﬂect Primary shared services KPI metrics. Processed: 16-07-2008 03:33:22 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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6. Governance The programme of transformation for the Defra sector will be lead through the following governance arrangements, making use of existing arrangements wherever feasible.

Defra Management Board

Sector Shared Services Programme Board

Customer Forum

Shared Shared Services Services Programme Organisation Management

Programme Delivery Team

The Defra Shared Services Programme Board16 will expand to take on the remit of the Defra Sector Board and will track progress against the Sector Plan. This board will be constituted with representatives from the Defra Family and other Government departments as they become customers. Key decisions will be escalated to the Management Board17 for ratiﬁcation and where required direction.

7. Sharing Services Beyond Departmental Boundaries In developing the Defra Sector plan it has been recognised that there are a number of other central government departments who are keen to move to a shared services operating model, but: — do not have suYcient scale on their own; — would need to make a major financial investment which has not been planned for; — would be unlikely to secure the benefits required in the CSR07 timeframe if they undertake their own programme; and — would like to work with another central government department who already has an established SSO and is of a similar size thus ensuring equal recognition when compared to the parent organisation being supported. In addition, Defra is keen to contribute to the broader cross government/public sector shared service initiative and promote the wider sharing of back oYce services. As one of the sectors in the forefront of developing shared services capability, Defra is committed to building a diVerentiated back oYce shared service. The intent is to set the shared service within a clear and equitable legal, governance and commercial model, which is flexible and responsive, not only to the immediate Defra family requirements, but to meet the needs of other departments or agencies in order to improve their service delivery experience. This will provide broader economies of scale and contribute to a transformation of back oYce service delivery in government.

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Annex N

Capability Review Action Plan

Submission to EFRA Select Committee 6th July 2007

Capability Review Action Plan

• Defra’s Capability Review Report was published on the 28th March 2007.

•In her response to the capability report Helen Ghosh detailed certain anctions that Defra would take as a result of the recommendations i its Capability Review.

•The Defra Management Board developed a more detailed action plan which included the activities in Helen’s response.

•The action plan that follows reflects the outcome of a prioritisation exercise to balance ambition with realism with the broader Renew Defra Programme. It injects pace, flexibility and accountability into Defra’s ways of working as well as providing the vehicle for Defra to meet the challenges of the future. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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Embedding the Capability Review Actions [1]

C apability R ef Action Our Our Our Our Non- P lanned R eview S hape Way Performance P rogramme R enew Delivery Area Date Strengthen 1 Design and roll out Leadership Development Apr 2008 the Senior programme for Management Board and SCS, as Leadership appropriate, covering future desired behaviours, Team capabilities and accountabilities 2 Develop Talent Assessment and Development Apr 2008 process as part of determining future capabilities for the department Develop the necessary accountability and capability arrangements that would support improved individual performance development in a Renewed Defra 3 Develop and communicate the compelling vision Some of where Defra is going. (Comms) aspects delivered (DVD’s). Others ongoing and being delivered. 4 Engaging Directors, Deputy Directors and SCS of Mar 2008 Delivery partners, develop a framework for setting out the skills and behaviours needed for their roles from April 2007

Embedding the Capability Review Actions [2]

C apability R ef Action Our Our Our Our Non- P lanned R eview S hape Way Performance P rogramme R enew Delivery Area Date Provide 5 Right structure, roles and processes across Core Customer Mar 2008 Services Defra to engage clients and influencers (blue bar Focus & around the in high level design) Regulation customer 6 Develop customer feedback input on priority Apr 2008 programmes to the Management Board that will be reviewed on a quarterly basis. 7 Implement Defra Service Transformation Plan, Apr 2008 including -Increasing take up of Whole Farm Approach (transactions with Direct customers) - Enabling Technology - Shared Services (integrated corporate service to provide better internal customers) 8 DG's & Senior team take a greater opportunity to Mar 2008 implement the "Take 5" initiative. 9 Deliver commitments in the Simplification Plan Apr 2008

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Embedding the Capability Review Actions [3]

C apability R ef Action Our Our Our Our Non- P lanned R eview S hape Way Performance P rogramme R enew Delivery Area Date Create a 11 Appoint a Defra delivery body representative as a Completed true Non Executive Director on the Defra Partnership Management Board by 2007. with Delivery Partners 12 Negotiate the priority areas for Renew with DRT Sept. respect to the key recommendations from our (Andrew 2008 governance of Delivery Action Plan and identify Robinson) those activities that fall within and outside of Renew. 13 Align Defra and Delivery Bodies business plans . DRT April 2008 (Andrew Robinson) 14 To implement interchange and access to other HR Apr 2008 forms of short term delivery experience, (Francesca supported by rewards for participation in this Okosi) scheme 15 Environment Agency, Natural England, Rural SSDU Completed Payments Agency and the State Veterinary (Tim Service have active biannual engagement with Render) Defra Ministers and Management Board .

Embedding the Capability Review Actions [4]

C apability R ef Action Our Our Our Our Non- P lanned R eview S hape Way Performance P rogramme R enew Delivery Area Date Set High 16 Develop the necessary accountability and Apr 2008 Standards capability arrangements that would support and Actively improved individual performance development in a Renewed Defra Manage Individual 17 Implementing the HR Organisational Design HR Completed and project in order to take account of development (Francesca Okosi) Organisation needs in deployment decisions (flexible teams). Performance 18 Develop regular engagement with Ministers to Apr 2008 discuss Defra’s organisation performance using an appropriate report (drawn from the revised balanced scorecard when developed) 19 Look at other organisations and establish a Apr 2008 process whereby Defra can meaningfully benchmark their performance and organisational design,from April 2007. 20 Develop strategic performance management Mar 2008 framework for the MB, revising and simplifying the balanced scorecard and using this as the key input into discussions on organisational performance between the Defra Management and Ministers, from April 2007. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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Embedding the Capability Review Actions [5]

C apability R ef Action Our Our Our Our Non- P lanned R eview S hape Way Performance P rogramme R enew Delivery Area Date Develop 21 Implement standard policy process, supported by Mar 2008 Robust guidance and training. Business Processes 22 Implement Defra standard approvals process for Mar 2008 programmes and projects and continued assurance over successful delivery from May 2007. 23 Establish Policy Process, PPM and Felxible Staff Mar 2008 Resourcing processes in a consistent manner across the organisation

Supplementary memorandum submitted by the Department for Environment, Food and Rural AVairs

FURTHER WRITTEN QUESTIONS TO DEFRA AND REQUESTS FOR INFORMATION

Background The following document includes questions that the Committee did not have time to cover during its evidence session with the Permanent Secretary on 18 July 2007. It also sets out the various requests made by the Committee for the Department to provide further information in writing. Committee requests and questions in italics.

Requests for Further Information

1. The Department agreed to provide the Committee with: A quarterly update of the Department’s progress initiating the Renew Defra programme (Q 18) Please see the attached highlight report (from 29 August 2007).18 We will send further highlight reports at the end of each quarter. The outcome of the ongoing exercise to determine administration budgets for 2007–08 (Q 32) Following detailed analysis of our budgets we consider that 2007–08 allocations include provision for £352 million of expenditure to be classified as administration. These allocations imply a £67 million overspend against the existing £285 million baseline for Administration Costs and the Department continues to work to reduce this expenditure. We are also in discussion with Treasury on the correct classification of some items of professional services expenditure, which may have consequences for our administration control total. A detailed note about how local authorities will contribute to Defra’s financial eYciency savings target, including an explanation of how these eYciencies will be achieved if local authority waste management costs are “rising steadily” (page 37 of the Departmental Report) (Q 64) Defra’s target for the area of Environmental Services (Waste Management and Street Cleansing) is to facilitate delivery by Local Authorities of eYciencies amounting to £299 million in 2007–08 against a 2004–05 baseline. The table below shows the trajectory initially planned.

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Savings 2005–06 2006–07 2007–08 Waste Procurement, £m 25 95 154 Street Cleansing, £m 5 10 10 Total, year by year, £m 30 105 164 Total, cumulative, £m 30 135 299

The savings to be made were calculated using an economic modelling system based on costs, “Local Authority Waste Recycling Recovery and Disposal” (LAWRRD). The model assigns an authority to one of three broad typological groups—urban, semi urban and rural. The distribution of properties from which waste has to be collected and transported makes a fundamental diVerence to the most suitable approach an authority should choose to adopt. Amongst its assumptions there is capacity to quantify a number of behavioural and decision options, including the following: — authorities plan their waste management strategies three to five years in advance; — there is maximum integration of waste collection and disposal operations in each authority; — the extent to which an authority chooses to adopt new waste disposal technology, enabling it to sell landfill capacity; — the anti-incineration attitudes of the electorate, modelled at £12 per ton; — the pro-recycling attitudes of the electorate; — pressures arising from meeting the landfill directive; and — market pressures arising from a number of players leaving the waste management business. The model was used to profile the local authority expenditure on waste management with and without the adoption of “optimal” waste management services. Both profiles showed a rising cost profile, reflecting the higher cost of recycling waste rather than just disposing of it through landfill. The forecast savings represented the diVerence between the two profiles. Therefore, savings reflect the costs of actual work compared with the “without optimal” waste management profile. In the most simple terms, even though the costs are rising, the costs are lower than they would have been had we done nothing. The main benefits in the area of Environmental Services are expected to derive primarily from more eYcient procurement and delivery of waste management services. The waste management services themselves are expected to benefit from a number of areas of eYciency: — collaborative procurements; — better specifications; — improved eYciency of contractor processes; and — improved eYciency of client processes. Progress towards the targets is reported by local authorities through their forward-looking Annual EYciency Statements in April of each year, their backward-looking Annual EYciency Statements in June of each year, and the mid-year Annual EYciency Statements in November of each year. Details of how the additional flood management expenditure will be phased in up to 2010–11, and the various sources of this expenditure (once this information becomes available) (Q 77–79) Details of how the additional flood management expenditure will be phased in up to 2010–11 will be decided in the Department’s forthcoming business planning round and the medium term planning exercise for the Flood and Coastal Erosion Risk Management capital programme. We will of course let the Committee have the information once the details are available. A detailed note about the provision for possible EU disallowance, including HM Treasury’s contribution (Q 93) Not printed.

Further Questions to the department

Headcount reduction target In its response to the Committee’s preliminary questions (Q 3), the Department says an additional ﬁnancial risk this year is the “Department’s ability to reduce its Administration costs in line with the targeted headcount reductions, as there is a systemic time-lag between the release of staV and the resultant savings to Administration costs”. The Department adds: “The Permanent Secretary will be able to update the Committee at the hearing on 18 July”. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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1. Could the Department provide an update about the possible financial risk it is facing this year because of the time-lag between targeted headcount reductions and savings in administration costs? The answer to this question is closely linked to the information we give above in relation to administration budgets for 2007–08. The latest administration budget for 2007–08 shows an outturn of £352,205,000 set against a baseline of £285 million. This assumes that we will achieve the headcount reductions as planned— delivering the remaining headcount reductions of 328 by the end of December 2007 to save three months of salary in this year. The financial risk of not meeting the headcount reductions would depend on the extent we might miss the target by and the length of time it would take to redress the balance. Therefore, it is diYcult to give anything other than a rather crude assessment of the financial risk. However, the “worst case” scenario in which the 328 surplus members of staV remain on our books until (at least) 31 March 2008, would add about £1.2 million to the budgeted paybill each month. This figure is based on an average monthly pay cost of £3,708. Over the course of 2007–08 this would give a financial risk of approximately £3.7 million (328 members of staV x £3,708 x three months % £3.649 million). The Department’s initial RPA headcount reduction target was 1,600 by the end of March 2008; the largest part of Defra’s total 2,400 headcount target. Page 112 of the DAR shows that there will now be zero RPA redundancies by that date. The DAR states, however, that there will be 600 RPA redundancies by the end of the next CSR (07) period, that is by 2010–11.

2. Why is the new RPA headcount target so much lower than the initial one, even though it’s three years later? Is this an indication you think current diYculties at the RPA will not be fully resolved until at least 2011? No. The RPA has made real progress in resolving the problems it had in implementing the Single Payment Scheme. This is demonstrated in its meeting its target for paying SPS 2006 claims. We expect this progress to continue in the SPS 2007 scheme. Although there is much to put right, the aim remains to provide a stable service for SPS 2008. The problems which arose in making SPS 2005 payments occurred after the RPA Change Programme was set up—the original planning assumptions are, therefore, no longer valid. As the EFRA report on SPS documented, the scheme turned out to be much more complex than was originally envisaged. The RPA is also now implementing SPS on a diVerent basis to that originally envisaged (in particular on a case working rather than task basis). We do, however, expect staV numbers within the Agency to reduce as SPS becomes more stable. We expect the RPA to improve its administration and make steady progress in reducing its headcount by about 900 in 2010–11.

Rural Payments Agency

IT at the Rural Payments Agency Defra’s response to the RPA report tells us that it will be spending about £50 million on the RPA’s IT systems in this and the two coming Financial Years: £19.9 million in 2007–08, £21.4 million in 2008–09 and £7.7 million in 2009–10.

3. Have other budgets been cut to ﬁnd the money for IT work at the RPA? If not, how was the money found? The investment required for the RPA’s IT systems for 2007–08 was allocated as part of the budget setting round for this year and reﬂects Ministers’ commitment to support the Agency’s Recovery Plan and improve the accuracy and timeliness of payments to farmers. Compared to the funding required in 2006–07 for the RPA’s operating costs, this actually represents a reduction of £64 million from £334 million to £270 million and the funding was prioritised as part of the budget setting exercise. Funding for 2008–09 and 2009–10 has not been decided yet as budgets for future years will only be agreed following announcement of Defra’s CSR settlement in October.

4. How much of this money being spent on the RPA’s IT will be paid to Accenture? The Department’s response to the Select Committee’s report on SPS includes a figure of £55.7 million for planned system improvements. These include business process re-engineering and support services as well as developments of our IT systems, including developments required as a result of already known policy changes. Policy changes incorporate reforms to the sugar regime into SPS, implement financial discipline controls and support simplification of SPS concerning set aside, energy crops and, potentially, the abolition of the 10 month rule. These changes will simplify RPA processes as well as providing benefits to farmers, in terms of the simplification of rules which relate to SPS payments. In total, we anticipate that about £40 million of these costs would be paid to Accenture over three years. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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RPA disallowance

5. If agreed with the National Audit OYce, could the Department provide the agreed RPA provision on the balance sheet for 2006–07 The provision for disallowance in the 2006–07 resource accounts is still being audited by NAO and so the ﬁgures given below have yet to be agreed. The provision will be made in Defra’s accounts rather than the RPA’s. The total proposed provisions are £348 million of which £150.2 million was provided in 2005–06 and £197.8 million in 2006–07. The provision is for potential disallowance in respect of SPS 2005, SPS 2006, other CAP schemes and also an amount for CAP scheme payments made by the devolved administrations. In addition to the provisions, accruals of £80.4 million (£17.4 in 2005–06 and £63.0 million in 2006–07) have been made in respect of disallowance for the Fruit and Vegetable Operational Programmes and late payment penalties for SPS 2005 to 30 June 2007. Contingent liabilities of £99.6 million are in respect of potential additional late payment penalties for SPS 2005 and potential increased disallowance for SPS 2005 and SPS 2006. These are also still subject to audit. The table in the section above on requests for further information gives a full breakdown by scheme.

6. What progress has been made with the European Union in agreeing the final disallowed amounts for each of the relevant financial years? The EC has not yet completed all the audit work on SPS 2005 and as yet has made no proposals over the level of disallowance. No work has commenced on the audit of SPS 2006. The RPA has contested one assessment of disallowance, in respect of another scheme, by challenging the decision at the Conciliation Body (CB). The CB has requested further evidence from RPA in support of the case. No timetable has been set for publication of the CB’s findings. It should be noted that the CB’s findings are not binding on the EC and so may not aVect the final disallowance assessment. Other proposals for disallowance received from the EC are being challenged by RPA and as yet there are no agreed figures.

Consultants Page 122 of the DAR shows that, in 2005–06, Defra spent £260 million on professional services, including £131 million on IT and telecommunication and £44 million on management and business consultancy. The total has increased from £141 million in 2002–03. Defra says that: The guiding criterion has been and remains value for money from the use of consultants and professional services where it is appropriate and necessary to utilise them as an alternative to building in-house capacity in supporting the Department’s strategies and objectives together with front line service delivery.

7. Why has your spending on consultants and professional services been so high in the last two ﬁnancial years? Do you have plans to reduce this spending? The table below shows the latest ﬁgures on expenditure on professional services, including data relating to the whole of Financial Year 2006–07.

Professional Services 2002–03 2003–04 2004–05 2005–06 2006–07 IT & Telecommunication £45,431,803 £52,805,769 £99,254,525 £130,937,698 £162,829,742 Management & Business Consultancy £15,317,092 £20,260,714 £78,671,992 £44,136,007 £29,344,628 Programme and Project Management £20,579,670 £23,118,978 £24,323,086 £18,192,186 £4,407,693 Research & Development £9,032,254 £9,751,623 £18,113,871 £20,190,046 £33,450,349 Specialist Consultancy £39,942,837 £39,828,357 £36,312,208 £36,646,432 £53,732,059 Temp StaV £10,536,838 £9,383,419 £9,623,459 £9,890,898 £6,665,696 Grand Total £140,840,492 £155,148,860 £266,299,141 £259,993,267 £290,430,167

The increase in Professional Services expenditure can be attributed to a number of factors: (a) In October 2004 Defra outsourced the provision of its Information Technology services. This resulted in a substantial increase in Defra’s expenditure in the IT and Telecommunications category because of the expenditure aggregation and re-categorisation. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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(b) In 2005 as part of Defra’s category management strategy underpinning the Gershon agenda, the Department undertook a detailed analysis of expenditure on Professional Services. This exercise has resulted in a revised classification of Defra’s expenditure. This has enabled the Department to develop and implement a more rigorous and appropriate strategy for the Professional Services expenditure category. This strategy includes: — letting Multi-Commodity Frameworks (framework agreements within an overarching category of expenditure). For example, there will be frameworks for Management & Business Consultancy, Project & Programme Management and Finance & Audit Interims. These will: — maximise Defra’s purchasing power; — introduce standard Defra rate cards; — facilitate improved contract management and benefits realisation; and — deliver improved value for money, including a heavy emphasis on payment and incentivisation mechanisms: — improved governance and control on Professional Services expenditure, including: — implementation in September 2007 of a Professional Services Commissioning Process which mandates Management Board approval on all Professional Services expenditure over £93,738 and any non competitive procurements in this category; — implementation in August 2007 of a Human Resources Recruitment Policy which covers the procurement of interims and consultants. This intends to strengthen the current controls by mandating that Defra fully utilises its Redeployment Register and Internal Trawl data before trying to fill vacant positions externally by using a consultant or interim resource. Any decision to fill vacant positions using external resources must be fully justified to and authorised by the appropriate management. In summation the Department needs to be very clear that skills or expertise that it is “buying in” do not already exist in the organisation. (c) The guiding criterion has been and remains value for money from the use of consultants and professional services where it is appropriate and necessary to utilise them as an alternative to building in-house capacity in supporting the Department’s strategies and objectives together with front line services. This approach has been reinforced by Sir John Bourn, head of the National Audit OYce who said: “Consultants can perform a vital role in delivering public services, providing skills which may be lacking in the public sector and helping to bring about improvements which may otherwise have been unattainable.” (d) The Renew Defra Programme, which was launched earlier this year, is an ambitious departmental change programme that aims to transform the way Defra operates. It will create a department where people and resources can be moved quickly and flexibly and work is undertaken more collaboratively and eYciently. One of the key aims of the programme is to use Defra’s internal resources more eYciently and eVectively thereby reducing the Department’s reliance and expenditure on external professional services.

8. What are you doing to improve skills within Defra so that your dependence on consultants reduces?

The results of work underway as part of the Our Way workstream of the Renew programme will lead to increased ﬂexible deployment of Defra staV across the organisation. This will enable managers to draw more easily on available resource both for short notice work and discrete short term projects and therefore reduce the need to engage temps and contractors in cases where Defra staV can and should be used. There are also currently tighter controls on engaging consultants via a moratorium on spend, with exceptions being assessed on a case by case basis, as well as recent Treasury guidance to increase visibility of such spend by charging consultancy costs in many situations to administration budgets rather than programme budgets. Tighter control on projects being undertaken across the department via Portfolio Management including the need for detailed business cases will help challenge and validate the approach being taken to resource activities before resources are released. There will be a place for consultants in relevant situations where they bring expertise or specialist knowledge but it will be important to try and ensure that there is appropriate knowledge transfer to Defra teams during projects to build capability of our teams. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 76 Environment, Food and Rural Affairs Committee: Evidence

9. How often do you require consultants to transfer skills to Defra staV as part of their contract so as to reduce the need to employ consultants in the future? a) Defra recognises that knowledge transfer is a two-way process and needs to engage with its professional services providers actively to ensure that its internal members of staV develop their skills when working with consultants. b) To ensure eVective knowledge transfer between external professional services resources and Defra employees, the Central Procurement Group has: — incorporated Defra’s approach to knowledge transfer within the speciﬁcations used when tendering for Professional Services Frameworks; — worked with tenderers to establish their views and experience of eVective knowledge transfer. This information is helping Procurement to develop a process to manage eVective knowledge transfer which is workable for both parties; and — decided to include advice and guidance in the Framework Agreement user guides on how to facilitate eVective knowledge transfer when using external Professional Services. This will include relevant Key Performance Indicators and speciﬁc tools and techniques that can be used.

PSA Target 3: SSSI Public Service Agreement target 3b: Sites of Special Scientiﬁc Interest Care for our natural heritage, make the countryside attractive and enjoyable for all and preserve biological diversity by bringing into favourable condition 95% of all nationally important wildlife sites by 2010. Page 53 of the DAR says that Natural England has developed a new SSSI information database (ENSIS) which will aid achievement of the target. The new system will facilitate the “production of timetabled delivery programmes” and will help to ensure that the action needed to bring SSSI land into target condition is “properly planned”. However, the DAR does not give indication of the performance of the database.

10. What testing and trialling has been carried out on the ENSIS database?

Natural England’s ENSIS database is used to maintain information on the ecological condition of Sites of Special Scientific Interest (SSSIs) in England. It includes data on species and habitats, management information and assessments of condition. Each SSSI is subdivided into one or more units for the purpose of management and reporting. Natural England has assessed the condition of all 22,000 of these SSSI units and for those in unfavourable condition has identified the reasons and the actions needed to bring them into a favourable or recovering condition (these actions are termed remedies). A remedy comprises the mechanism that is required to deliver favourable or recovering condition, the organisation(s) responsible for carrying out the necessary action, and a date for implementation. ENSIS was expanded in 2005 to capture remedy information and record progress against delivery—this subsection of ENSIS is known as the Remedies Database. The Remedies Database was developed to co-ordinate work between the public bodies, commercial statutory undertakers and voluntary bodies which manage and regulate activities on SSSIs. Natural England carried out trialling of the Remedies Database over a three month period in 2005, with the help of the Environment Agency, the Ministry of Defence, the National Trust and the RSPB. This trial led to a number of improvements, which were put into eVect before the system was launched. The “roll out” of the live database also involved detailed discussions and testing with partner organisations to make sure that the remedies reflected the partners’ current operational practices. These remedies are kept under continuous review and are updated when necessary. Delivery partners access remedies data through a secure gateway to ENSIS, and provide feedback in the form of agreeing the proposed remedies or by making suggestions as to more appropriate remedy mechanisms or responsible organisations. This in itself is a key method of validation, as partners are able to confirm that the data held in relation to their organisation is correct. In total, 259 separate organisations have identified remedies and there are 340 users registered to access the Remedies Database. The system has now been in operation for two years and confidence in its integrity is high. Natural England runs monthly validation reports on the ENSIS database and it is designed with various inbuilt checks to prevent incorrect data being entered. Data from the Remedies Database are also regularly reviewed by the key stakeholder group for the SSSI target—the Major Landowners Group. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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PSA Target 6: Waste and recycling (DAR, p 40–42) Public Service Agreement target 6: Waste and recycling To enable at least 25% of household waste to be recycled or composted by 2005–06, with further improvement by 2008. Page 42 of the Departmental Report says that Defra paid out £105 million to local authorities in 2006–07 under the Waste Performance and EYciency Grant (WPEG) programme. A further £110 million will be provided during 2007–08 and will be administered by the Department for Communities and Local Government as part of its Local Area Agreement (LAA) fund. In its response to the Committee’s preliminary written questions (Annex, Q 5), the Department says that the WPEG grant is unringfenced in accordance with the Government’s policy of giving local authorities freedoms and ﬂexibilities.

11. How can the Department be certain that the unringfenced WPEG funding to local authorities is not diverted elsewhere, thus having a negative impact on PSA Target 6?

Defra worked closely with the National Audit OYce to develop an evidence base to provide information about the levels of Waste Performance and EYciency Grant funding allocated to waste-related projects in 2006–07. Information was sought on a voluntary basis from the 25 local authorities that received the largest allocations, covering 26% of total funding. The responses from local authorities indicated that around 95% of the funding allocated was assigned to waste projects. Some funding was allocated to waste projects but not used in the period and it has been carried forward by those authorities for use in 2007–08. A high proportion of spend on waste for an unringfenced grant is an indication of the importance which local authorities attach to moving management of waste up the waste hierarchy.

For 2007–08, Waste Performance and EYciency Grant has been allocated to local authorities through Local Area Agreements (LAAs). Inclusion of mandatory waste outcomes in LAAs gives Government a clear basis on which to assess the performance of local authorities in relation to waste. As with other LAA funding, WPEG is unringfenced within the parameters of the LAA and it is therefore for local government to decide how to invest to achieve their negotiated outcomes.

New Public Service Agreement (PSA) Targets for the CSR 07 Period

12. How will you ensure that the indicators for the two new proposed PSA targets will be measurable and speciﬁc, as opposed to some of the current PSA targets?

13. Both PSAs will be delivered by a number of Government departments, with Defra taking the lead. How will this work in practice?

The PSAs focus on a cross-Government set of high-level strategic priorities, which are shared by several Departments. Each PSA will be assigned a speciﬁc Cabinet sub-committee, which will act as necessary to resolve questions relating to that PSA and which cut across interdepartmental boundaries. All departments will be responsible for reporting on their contribution and will, therefore, have a stake in making this system work eVectively.

Making indicators for the new PSAs measurable and specific is a key aim of the whole CSR. The specific intention of the guidance for the new CSR is that indicators should be more outcome-focused, specific, measurable, and accurate enough to enable decision making. The indicators that we have proposed for the two PSAs led by Defra will conform to these criteria.

On cross-departmental governance, we understand that central guidance will shortly be published on reporting and monitoring arrangements. A six month reporting cycle for PSAs is envisaged, with one self- assessment per PSA provided by the lead department, covering progress against the indicators and other key elements of the delivery agreement. The lead department will then be responsible for securing contributions from other government departments to the PSA report.

In the case of Defra, we will expect representatives (at an appropriate senior level) of the formal delivery partners for the PSAs which we lead, to sit on the relevant programme board. They will be expected to provide us with returns on their contribution to the delivery of the PSA when we report to the Treasury every six months. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

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Animal Health and Welfare

Pet Fairs The Government has declared its intention to produce regulations prohibiting the sale of animals in the course of business to members of the public at pet fairs by 2008.

14. What consultation has been held by Defra on the legality of pet fairs? A 2006 Judicial Review found that a decision by a local authority to issue an organiser of a pet fair with a licence made under the Pet Animals Act 1951 (the 1951 Act) was incorrect. This was because a pet fair was considered to be a collection of stalls in a market and even if a licence could be issued, each stallholder would need to be licensed rather than just the organiser. The Judicial Review therefore clariﬁed that licences made under the 1951 Act could not be issued to organisers of pet fairs. The 1951 Act is only concerned with those people in the business of selling animals and not hobbyists. So, a pet fair that includes the selling of animals by hobbyists only, can continue to do so without the need for a licence. The Government proposes to launch a consultation on draft pet vending regulations to replace the 1951 Act by the end of this year. We propose to maintain the ban on commercial pet fairs, although with exemptions in respect of commercial koi carp shows, racing pigeon shows and poultry shows because the hobbies rely heavily on commercial vendors and there have been little or no reports of poor welfare at these shows.

15. Is Defra on track to produce new regulations for pet fairs by 2008? The Government proposes to bring into force regulations to replace the existing Pet Animals Act 1951 in October 2008. A wide consultation will commence by the end of this year.

Circuses and performing animals The Government has declared its intention to produce draft regulations on wild animals in circuses for public consultation by 2008. The Government has proposed that trainers of performing animals should be licensed and that premises where animals are housed, trained or perform should be subject to inspection. The Government intends to consult on this proposal but no timetable has been set.

16. Has the Circus Working Group reported its ﬁndings to Defra ministers yet? When will the draft regulations on the use of wild animals in circuses be available for public consultation? Due in part to the indisposition of the Chair of the Circus Working Group, there has been a further delay in the submission of the report on wild animal acts in circuses to Defra Ministers. We anticipate that the report will be published soon after recess and Ministers will want to reﬂect on the contents before any decisions are reached. It is not yet possible to advise the committee on how or when the regulation of wild animal acts in circuses, including any public consultation, will be progressed.

17. What is your timetable for the introduction of regulations on the licensing of performing animals? The timetabling for secondary legislation was changed during the passage of the Animal Welfare Bill through Parliament because of diVerent priorities expressed by Parliamentarians. Priority is now being given to wild animals in circuses, pet vending, game bird rearing and greyhound racing. As a result, it is no longer possible to oVer a commitment concerning the timing of regulations on performing animals. Nevertheless, we recognise that there is a need for the legislation relating to performing animals to be overhauled. In the meantime, PAWSI (Performing Animal Welfare Standards International), which currently acts as a voluntary industry regulator, is continuing to make signiﬁcant progress in raising welfare standards for animals used in all types of performance. This has included setting standards and accreditation of skills, including a NVQ scheme for animal trainers and suppliers. The work being done by PAWSI, which has received widespread backing from the audio-visual industry, indicates that there is considerable scope for self-regulation within the industry, which we regard as preferable to Government intervention. Processed: 16-07-2008 03:33:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG1

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Disease Preparedness Pages 97–98 of the DAR outline Defra’s animal disease preparedness policies. It says Defra has contributed £30 million over three years towards the global eVort to tackle avian ﬂu at sources and prepare for a possible pandemic. Defra has a planned 2007–08 allocation of £156.1 million towards the cost of eradication of BSE. In addition, Defra has a planned allocation of £97 million in 2007–08 and 2008–09 towards control and research for Bovine TB. Of that, £18.8 million has been earmarked for research. In June 2006, there was a re-emergence of the bluetongue virus in Germany.19

18. Which potential disease risks has the executive agency Animal Health identified in the near-term future? To what extent is the Bluetongue virus considered a threat to the UK? As the current outbreak of Foot and Mouth Disease illustrates, incidents of exotic notifiable disease are largely unpredictable. Disease prevention and contingency planning are therefore generic in order to recognise a wide range of threats. Aside from the current Foot and Mouth outbreak, of greatest concern at present are: — highly pathogenic avian influenza which is present on the continent and which could be brought to GB through uncontrollable wild bird migration. — Newcastle Disease which could also be introduced to poultry flocks from wild birds. This risk is lower because commercial poultry are routinely vaccinated. — Bluetongue. See below. — Exotic diseases of pigs—classical swine fever, African swine fever, swine vesicular disease. These are all present within the EU and are relatively easy to transmit, particularly through illegal feeding of waste food. — Foot and Mouth Disease is still widespread in Africa, Asia and South America and new strains emerge. In addition, Defra closely monitors and assesses the risk to the UK of global outbreaks of high impact animal diseases (such as Foot and Mouth Disease, classical and African swine fevers, African horse sickness, sheep and goat pox, Rift Valley fever; peste des petits ruminants and lumpy skin disease). It considers various routes (including legal and illegal trade, natural factors, and mechanical transmission) by which diseases could potentially be introduced to the UK. Defra and Animal Health also regularly review disease control strategies and contingency plans as a matter of course, in order to be fully prepared for any potential disease incursion. Further information can be found on the Defra website: International Disease Monitoring http://www.defra.gov.uk/animalh/diseases/monitoring/index.htm Notifiable Diseases http://www.defra.gov.uk/animalh/diseases/notifiable/index.htm There have been a number of recently reported cases of Bluetongue serotype 8 (BTV8) in north-west Europe (Belgium, The Netherlands, Luxembourg, parts of western Germany and parts of north-eastern France). The emerging epidemiological evidence demonstrates that the BTV8 has successfully over-wintered in the areas that have been aVected last year. It is now also spreading into adjacent areas not previously known to be aVected. In addition, other strains of bluetongue are present in Southern Europe. Imports of live animals from infected areas are not permitted. Animals that transit through bluetongue restricted zones are treated with insecticides. All susceptible livestock imported from the continent are restricted until they have given a negative result to post-import testing. Infected midge vectors may be blown across the sea to Eastern England. This possibility is kept under constant review with the help of a meteorological model but cannot be predicted with certainty. Defra continues to monitor and review developments.

[18b] The Government has recently announced proposals to allow the farming sector greater input into future animal disease and prevention policies, in exchange for the sector sharing some of the costs of these policies.20 How do you anticipate animal disease control and prevention will be funded in the future? What role do you envisage the farming sector will have in the development of the animal disease policies? We are looking to establish shared responsibility for animal health and welfare policy, controls and costs, partly by building on increasingly productive partnership working experience. This will involve a shift in the funding balance away from the tax payer to those beneﬁting directly from the disease control regime. It should also result in cost eVective, practicable solutions in relation to disease prevention and control. Ideally, the mechanisms used to generate revenue for this purpose will be designed to encourage behaviours addressing risk, while discouraging risky behaviour.

19 “Fears of Bluetongue virus hitting the UK this year are heightened”, Farmers Guardian, 29 June 2007 20 “Rooker’s u-turn gives industry a voice on disease control”, Aberdeen Press & Journal, 3 July 2007, p 20 Processed: 16-07-2008 03:33:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG1

Ev 80 Environment, Food and Rural Affairs Committee: Evidence

The Department is working closely with industry to develop proposals, principally through the work of the UK Consultative Forum; this body is tasked with representing the interests of the entire food chain, and consists of representatives of the main farming unions and departmental oYcials from across the UK. Following consultation on the principles of responsibility and cost sharing we intend to launch further public consultations over the next year. Working with the industry in this way will establish the basis on which we will look to establish clear roles and responsibilities on animal health and welfare, policies, controls and funding.

Bioenergy The Government Response to the Committee’s Report “Climate change: the role of bioenergy” stated that the outcome of work examining the potential support mechanisms for renewable heat would be reported in the UK Biomass Strategy. However, the UK Biomass Strategy (May 2007) only reports that Ernst & Young has been commissioned to examine “the initial business case on support for renewable heat”.

19. What progress is being made to develop appropriate support mechanisms for biomass heat? As stated in the Energy White Paper published earlier this year, the Government is committed to reducing carbon dioxide emissions from heat across all sectors through a variety of methods including the encouragement of renewable energy technologies for heating. Amongst these technologies, biomass heat plays a key role. Since publication of the White Paper several Government Departments, including Defra and BERR, have been working together to examine the case for support for several renewable energy technologies, including biomass heat, and if necessary to develop options for that support. OYcials are due to report to Ministers later this year.

[19b] The Biomass Taskforce reported in October 2005. Why, nearly two years later, is the Government still “continuing to develop its thinking in this area” (Energy White Paper)? The Government has produced a Biomass Strategy, which was published alongside the Energy White Paper earlier this year. The Strategy identiﬁes biomass heating as the most cost eYcient use for this fuel and provides a framework for the development of biomass. The Government believes it is essential to consider the heat sector holistically and is carrying out further work into the case for supporting renewable heat technologies including biomass heat and, if necessary, into developing options to provide that support. This work is considering the potential for low carbon heating across the economy at all scales from domestic to large-scale industrial use and exploring options to encourage the uptake of renewable technologies further, including biomass-related technologies, building on the work set out in the Biomass Strategy and the 2007 Energy White Paper. OYcials are due to report to Ministers later this year. Department for Environment, Food and Rural AVairs September 2007 Processed: 11-07-2008 00:21:03 Page Layout: COENEW [SO] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 81

Tuesday 23 October 2007

Members present:

Mr Michael Jack, in the Chair

Mr GeoVrey Cox David Lepper Mr David Drew Dan Rogerson Mr James Gray David Taylor Patrick Hall Mr Roger Williams

Witness: Rt Hon Hilary Benn MP, Secretary of State for Environment, Food and Rural AVairs, gave evidence.

Q1 Chairman: The hour of five o’clock has come and Hilary Benn: I am not responsible, Chairman, for the Committee welcome, for his first appearance what people choose to write in newspapers. All I can before the Environment, Food and Rural AVairs do is honestly answer the question which you put to Select Committee, Hilary Benn, the new Secretary of me, which is what I am trying to do. State. Thank you very much for making time in what has turned out to be quite a busy period for you, Q3 Chairman: The honest question is we assume that having come in just before the summer, having had you are not going to change your approach to your summer holidays disrupted by the outbreak renewables targets, if I have understood what you of Foot and Mouth, then you ran straight have said? into Bluetongue, plus the implications of a Hilary Benn: No, that is correct, because we signed Comprehensive Spending Review. You have up, along with the other EU Member States, to what certainly had an active and interesting start. We are was agreed earlier. The Commission is going to have delighted you are here before us. We would like to to come back to tell us about how they propose to talk to you about some of the issues and some of the divvy up responsibility for meeting that target and priorities for your Department. I must say, you are we intend to meet whatever is given to us, as I am giving us all kinds of interesting surprises. Yesterday sure every other Member State that signed up we had a new output of a report on the question of intends to meet its commitment. Bovine TB and culling, we will come on to that a little bit later. Each day brings a new challenge and Q4 Chairman: Let us move to the nitty gritty, and a new opportunity so we are looking forward to one of the key things as far as your Department is talking to you. Can I start oV with something which concerned, your budget. You got a 1.4% increase in appeared in the press this morning because the real terms, slightly above the level cash position environment is a key issue as far as your Department which I believe you were planning towards. is concerned. The headline in the Guardian said, However, if you take out of that the additional “Labour’s plan to abandon renewable energy monies which are for flood defences, what is your targets”. The Guardian may be well oV the mark. opinion to the Committee about how you are going Would you care to deny that there is any idea that to meet all the other calls on your budget with what you are going to deal in the way this article suggests still seems to be a very tight settlement? Is it all going with renewable targets? to be financed eVectively from eYciency savings Hilary Benn: First of all, can I say, Chairman, that within your Department in terms of meeting your it is a pleasure to be appearing before the Committee other outgoing priorities? today. You very accurately described the summer Hilary Benn: It is a very tight settlement because, as that I have had. It is a very interesting and a very you rightly say, Chairman, notwithstanding the real challenging job. Secondly, to say I would not, as terms increase of 1.4%, there is good news on none of us do ever, believe everything we read in the flooding, which we may come to, on waste PFIs, on newspapers. Thirdly, to say that the Government is the environmental transformation fund but it is very committed to the target for renewables, which tough on everything else and, therefore, we are going was agreed earlier this year by the European Union. to need to prioritise. We are obviously working, now We are going to need to do a lot more on renewables we have the Comprehensive Spending Review, on if we are going to beat climate change. I think people what the spending plans for 2008–09 are going to be. will be able to see the proof of that in the steps we are We will be making provision for a departmental going to take. Do not believe everything you read in unallocated provision, which we have not had in the the newspapers is the short answer. past, but I am not going to hide from the Committee that we are going to face some pretty tough choices about how we prioritise the expenditure, given a lot of pressures on the budget.

Q2 Chairman: Can we expect to see a story Q5 Chairman: You have been there for long enough tomorrow that is not going to be denied by your to think about prioritising, can you enlighten us a bit Department today, “Minister rebuts u-turn on more about what is going to be at the top of the list renewable targets”? and what is going to be at the bottom? Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP

Hilary Benn: If I may take the opportunity of this answer is by shifting some of the cost from what we question just to talk very briefly about what I see as currently bear to the livestock industry picking up the priorities in the job. I think the first thing I would some of the cost. say to the Committee is to get the basics right so that includes things like the RPA, dealing with events that come along—flooding, animal health and Q7 Chairman: When are we going to see this fleshed diseases—sorting out our finances, because I do out into something concrete? In other words, when regard that as getting the basics right. Secondly, are you going to consult on a cost-sharing policy? climate change, because what we do domestically, Hilary Benn: We intend to start on consultation in and the Climate Change Bill remains a the not too distant future but I have to tell the groundbreaking piece of legislation, whatever we Committee that the timetable we were previously contribute as the UK, and we must absolutely play working to on that consultation has, not our part, it is an international deal that will surprisingly, been thrown out of kilter a bit by the determine whether we make progress in the fight events of the summer, and in particular Foot and against climate change. The third priority for me is Mouth and Bluetongue, for reasons I think the natural environment and biodiversity because I everybody will understand. would not want anyone to think that because we are so focused as a Department, and have been understandably on climate change, that we do not Q8 Chairman: If you are not going to save £121 care about those things, because we do, and anyone million by 2010–11 you are going to have to find who digs below the surface to look at the range of some savings from somewhere else so what is work that we undertake, both through Natural featuring in the cut zone in Defra? England and the Environment Agency would see Hilary Benn: We are going to have to look at the that is the case. The Marine Bill which we are whole of the budget over the three year period but I drafting will be very important. I think the fourth am keen that we make progress on the cost and priority is working with others because what strikes responsibility, including in relation to the saving me, Chairman, most forcefully about this job is how that we have to make on animal health. There are much of the things that maybe together we want to those who might argue, “Well now is not the time to see happen depend on other people playing their have the conversation with farmers” because it is a Y part across the rest of Government and elsewhere. I di cult time and I recognise that, which is why we suppose I am saying to you that I will want to take have put oV the start of the consultation, but I have a view, and I have not finished the process, on to say that I will come to this with even more vigour whether the priorities for expenditure out of a very than I might have had previously because I am very tight settlement are going to be judged against those clear in my mind that it is a change that we ought to priorities that I have just set out myself. make. I hope the farming industry will see the benefit of that change because, yes it will involve picking up more of the cost but what will come with it is taking Q6 Chairman: One of the ways in which it is said you much more of the responsibility for putting in place are going to release cash in your Department to the controls and restrictions and deciding when they tune of £121 million is on a burden sharing should be eased in relation to handling animal environment with reference to animal health and diseases. I think it is a better way of doing things. welfare with the industry. How is this going to be Chairman: No doubt we will be looking at the detail. achieved by 2010–11? Mr Taylor has a question on the Marine Bill and Hilary Benn: It is pretty ambitious but I have to say then back to our original subject. my experience over the summer in dealing with both Foot and Mouth and Bluetongue has really brought home to me, and I did allude to this in the House the Q9 David Taylor: The legislative programme, other day, that the debate about responsibility included reference to a draft Marine Bill. Why do we sharing and sharing of cost has turned for me from need it in a draft? We have had a White Paper. We something which, when I arrived, people said, “Well have had consultation which closed in June. Are we this is something we have to work on as a not in a position to draft the primary legislation and Department” to a really live issue because I have no get that moving through this place? We seem to be doubt in my mind, in the light of the experience that doing a little bit of subtle, or unsubtle, foot dragging I have just been through, that sharing responsibility on this. for taking a lot of the decisions about how we deal Hilary Benn: I do not see it as any foot dragging at with animal diseases is something that we should do. all. I think there is every merit in producing a Bill in I am not entirely clear why if you were designing draft. It gives people a chance to have a look at it and from scratch you would have the person doing this see what they think to make sure that ultimately we job taking those decisions. Indeed, the extent to get it in the right shape. We are very committed to which we worked in partnership with the industry in putting a Marine Act on the Statute Book. talking about how some of those decisions might be taken, I think has been a feature and a very positive feature of what we have done in the summer. Q10 David Taylor: We had an extensive consultation Secondly, therefore, how are we going to share the on the White Paper, did we not? cost of the consequence of those decisions? The Hilary Benn: Yes. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP

Q11 David Taylor: I assumed that was why the great departments in response to precisely the point that bulk of our reﬁning suggestions were in? you make, Mr Drew; that is the ﬁrst thing. Secondly, Hilary Benn: As a matter of general principle, if you British Waterways, we do need to work in close have the opportunity to produce legislation in draft, partnership. To be perfectly honest, I have not in my I think that is a good thing. I would not want the three and a bit months yet had a chance to turn my Committee to think in any way that is a sign of the attention to British Waterways. Government wanting to drag its feet, we do not. There is a great head of steam behind a Marine Bill Q16 Mr Drew: They are excellent reports. and we are keen to make progress on it. Hilary Benn: I am aware of your excellent report.

Q12 David Taylor: We gave a manifesto Q17 Chairman: You have upset him! commitment to have a Marine Bill— Hilary Benn: I have already upset him. I hope the Hilary Benn: Indeed, we did. Committee will be merciful but I am conscious of the fact that British Waterways gets sources of funding Q13 David Taylor: --- on the stocks during this from other activities and I am certainly up for a Parliament. Do you believe we will still have it? conversation about what the right way to go forward Hilary Benn: We are absolutely committed to that, is in relation to British Waterways. On other yes. Parliament is not over yet, as we know. Government departments, I suppose it comes back to my fourth priority which is working with others Q14 Mr Williams: Is the position of the Scottish because in the end what we do want to achieve, I Parliament and the Welsh Assembly a hindrance to think round the table, is that the things that Defra developing the Marine Bill? exists to do, to promote, to argue for, the things that Hilary Benn: There are undoubtedly issues that we we care about, we want other people to promote and are discussing and will need to discuss with both of argue for and care about too. You can run a system the devolved administrations. I hope very much that where you are trying to buy a whole system of levers we will be able to reach an agreement so that we can to enforce diVerent ways of doing things, diVerent have a UK wide Bill. That depends on the outcome ways of thinking on other people, or you can try very of the discussions but I think we all have an interest hard to persuade them that actually this is something in putting in place, for our seas and what is they ought to be doing themselves. Mainstreaming is underneath them, a system which provides the a horrible term, and I loathe it, it describes the features that we have for trying to decide what process. I think with the PSA structure we have got, happens on land for a very long period of time. I am we have a better set up. In the end it is about the force keen that we make progress. of our arguments and it is also about the force of public opinion because that shifts things too. That is the other part of working with others because where Q15 Mr Drew: This Committee has identiﬁed on many occasions that Defra has a large number of the public is and where the public wants to go on a targets, but does not have the commensurate lot of these issues will have a profound inﬂuence on number of levers to meet those targets. Now, take what governments around the world do, including two areas that we have been looking at recently: this one. British Waterways, you have got there entirely the funding coming from Defra and yet DCMS, DfT, Q18 Mr Gray: Secretary of State, I would like to take DBERR, all stand to gain by some of the things you back to something you said a moment ago which going on with our waterway network; rural policy, I think large parts of the livestock industry around Defra has within its title “rural aVairs” and yet much the nation might have heard with some alarm. of the money is with DCLG in terms of community Forgive me if I summarise what I think you are empowerment. One of the problems with this saying—and if I have got it wrong then you will Department is it has not been very good at getting correct me—namely, that under the new scheme that support from other departments, despite the fact you are currently tinkering with decision-making on that there is this partnership which could work very some of these very important disease control well. In what ways do you think you could be more matters, for example, would be shared more with the eVective in so doing? livestock industry than it is at the moment? Hilary Benn: A number of things there. One is, I Hilary Benn: Yes. think if you look at the new PSA targets, and I know this is an issue which the Committee has considered Q19 Mr Gray: In turn they would land up paying before, and you have been at the forefront in arguing quite a lot of money, basically. That sounds to me a for change in the system, less focus on inputs and little worrying. I would like to think that Her more focus on measuring outcomes, we have now Majesty’s Government was already consulting very got the two Defra-led PSAs, securing a healthy widely with the livestock industry. I wonder if you natural environment and avoiding dangerous can think of any examples of any decision that the climate change, which other departments also signed Government has taken which they would not have up to. We are party, also, to a number of other PSAs taken with regard to animal health had that new that other Government departments lead on. I think scheme been in place? what the Government has been trying to do in Hilary Benn: It is the case—I cannot tell you how it restructuring the PSA system in that way is to try was before because I arrived on 27 June—in taking and get greater buy-in from a range of Government decisions both in relation to Foot and Mouth and Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

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Bluetongue, we have done that in very close safety with regard to the livestock industry, any area, partnership. We have had a stakeholder group that where you would say in the event that this new we have consulted about always having regard to the regime had been in place you would have done assessment of veterinary risk. We consulted them something diVerent from what you are currently about what the right way forward was. Let us take a doing, with regard to Bluetongue, with regard to very current issue which is the decision about where Foot and Mouth? we should draw the protection and control zone Hilary Benn: With respect it is not a question— boundaries for handling Bluetongue. This was brought home very forcefully to me when I went to Q22 Mr Gray: What are they paying for? What will Newmarket a couple of weeks ago and talked to a lot they get in return for the money? of farmers who were at that time really caught by the Hilary Benn: The ability to take the decisions about controls, unable/unwilling to buy animals in because how animal diseases are dealt with within the they were not sure whether they would get them out. constraints which are provided by Europe and We have made movement on access to abattoirs internationally. With respect, what strikes me very since then. Question, who in the end should take a forcefully, Mr Gray, is that sometimes farmers will decision about where the control and protection say, “Well you have got these restrictions on us, as if zone boundaries should go? There is a minimum that it was for our beneﬁt or for reasons other than trying Europe prescribes. Question, should it be the whole to control animal disease”. I think the people who of England or not? You are trading on the one hand, are in the best position to take those decisions are if you make it the whole of England— those who have the greatest incentive in the decisions being the right ones, that is not to say the holder of Q20 Mr Gray: We are going to come back to that this oYce does not have the same incentive, but I precise question on Bluetongue in a moment but the think it would be a much better system to have nature of my question was not that, the nature of my clarity about who is in the lead here and I am question was this, if you are saying in the future the describing to the Committee a change under which livestock industry are gong to have the fantastic decisions which are currently taken now could be privilege of sharing decisions with the Government, taken by a new body which represents the industry. then presumably there must be decisions which the livestock industry are not currently sharing with What you are now saying is that the Government. What I want to get from you is one Q23 Mr Gray: Government intends to abdicate responsibility— example, any example of any decision which the Hilary Benn: No. livestock industry should have been sharing with Government but has not and, indeed, of course, a supplementary question to that would be, if they Q24 Mr Gray:—which many ordinary people could have not, why have they not because surely you reasonably presume to be good decisions for the ought to be consulting with the livestock industry? Government to take, and you would be handing that Hilary Benn: With respect, sharing with over to an industry, in this case the livestock farmers, Government, in what circumstances? In relation to to ask them to take decisions which the Government diseases which are zoonotic, where there is both an ought to be doing. In return for doing that, even implication for animal health and human health, though you ought probably to have been listening to then obviously the Government has got to play a farmers anyhow, the livestock farmers are going to part, but if you take Bluetongue then I do not see in have to be able to pay large sums of money for that future why a decision about where you would draw privilege. It sounds like a pretty dumb deal to me. those control zones, in this case actually should not Hilary Benn: With respect I would not agree. I think be taken by a body—we have not yet worked out there are those in the farming industry who look, exactly what it is going to look like—representing and I know the current situation is very diYcult the industry, there may be Government because of the two diseases which farmers are having representation on it. I would envisage a diVerent to deal with, who can see that this is a diVerent way system in future where the holder of this oYce was and in truth a better way of doing things. It is about not taking a decision like that because, trusting, it is a diVerent system in which you would fundamentally, Mr Gray, the impact is felt by the trust the farming industry to say, “Well, actually industry. There is a trade-oV, as we know, in relation these diseases aVect you, you are the ones who have to Bluetongue as to where you draw the boundaries. to manage it, therefore why should you not be taking these decisions as opposed to the holder of this oYce?” I can see you are not persuaded. Q21 Mr Gray: Forgive me, I have always acted on the presumption that the Secretary of State for Defra was taking these decision in the best interests of the Q25 Mr Gray: Not entirely persuaded. You and I livestock industry and of human health and, were on this Committee together 11 years ago, therefore, in the oYce you hold, you were doing the although your political career has been rather more best thing for the nation. What you now seem to be successful than mine in the meantime. telling me is under this new regime, which the Hilary Benn: Not quite 11 years ago. livestock industry are going to pay a lot of money Chairman: We are looking forward to your for, goodness gracious me, they will have the consultation on this, to see how it is going to work, opportunity to diVer from you. What I want to know particularly if the livestock industry got the wrong from you is one example of any area of health and decision and you had to pick up the pieces. Mr Gray Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP wants to ask you some questions now about Hilary Benn: As far as I am aware, I will let the Bluetongue. You will do those very quickly, will you Committee know if I have got that wrong, yes. There not, Mr Gray. are three companies, Merial, of course, being one of them and the names of the other two have escaped me for the moment but as far as I am aware they are. Q26 Mr Gray: Very swiftly indeed. Are you content with the way in which it has been done, you briefly touched on this question of the two zones, there are Q29 Chairman: The reason I ask is that there are Y diVerent types of Bluetongue. I do not know, di culties associated with that. Particularly in my Y own area, for example, just outside my constituency, technically, whether it is easy or di cult to produce the border goes through the middle of one farm, the the vaccine. Obviously Defra is involved in the work, farmer cannot move the animals across the border. for example, in taking forward vaccine work on TB but, on the other hand, I wonder if this is more Would it not be better to have a UK wide one or an straight forward. Anyway, perhaps you could come England wide one or something like that? back and enlighten us in due course? Hilary Benn: On that last point, this is a genuine Hilary Benn: Okay. dilemma and it goes back to the previous answer I gave. If you declared the whole of England now, the price you pay is that the disease may move further Q30 Dan Rogerson: Moving very much in the and faster than would otherwise be the case, bearing manner of your summer from one outbreak to in mind temperatures are now dropping, but I think another, Foot and Mouth. It caused a huge anxiety there is a little doubt if you look at the experience of in terms of restrictions and obstacles to the industry Europe that it will be back next year. Weighing that and great cost to farmers and, indeed, to the against the benefit that would then flow to those who Department. Looking at the source of the recent are locked in by the Bluetongue control and outbreaks, as the licensor, regulator and inspector of protection zones. Now, fundamentally, I think the facilities working with the virus, was Defra industry has to try and answer that question because responsible for ensuring that the drainage on the they are balancing the diVerent interests that they Pirbright site was fit for purpose? Do you accept that have got. The stakeholder group with whom we have under the SAPO licences Defra issue it should have met so far, and consulted on this, has said, “Let’s try ensured that the drains were up to containing the and keep it where it is” bearing in mind that winter virus? is coming but because of the cases, and the 20 and the Hilary Benn: As I have said to the House, on two 150 kilometre radius, in eVect it has now taken a occasions, what happened should not have great chunk of England in the middle, leaving the happened and we have to understand why it North and the South West out of the zone but we will happened and have a better system in future; that is the first point. Secondly, under the SAPO licence have to see what happens in terms of the further arrangements, the licensor, in this case Defra, development of the cases. We have at the same time specifies what has to be achieved and the person who tried to ease some of those restrictions of the farmers holds the licence has the responsibility for ensuring I spoke to and those you represent by getting access that they deliver it. In response to the very direct to slaughterhouses in particular. Clearly if a question, did that licensing and taking responsibility boundary runs right through the middle of a farm it arrangement involve having a look see at the state of does not strike me as a terribly sensible way of doing the drains, the answer is no it did not. With it and I know that in drawing the boundaries we hindsight, that is one of the lessons we ought to have consulted with a stakeholder group, in so far as learn. The other conclusion that I have drawn is, we have discretion, keeping within the circles that we again with hindsight, it is not a good idea to have a have to draw, to follow more natural or sensible major customer institution also being the licensor boundaries than just literally taking a straight line, a and the regulator. That is why, having had the HSE Y curve, which means it is sometimes di cult for and Spratt reports, in establishing the two reviews, people to know which side of the line they are. one the BBSRC will lead looking at funding and governance at IAH, the second one is Bill Callaghan’s review which is going to ask the Q27 Mr Gray: Lastly, the vaccine, what about a Bluetongue vaccine? question, to what extent does the licensing and regulation and inspection arrangements for category Hilary Benn: There are three companies working V away at it. Everybody is very anxious that we should 3 and 4 animal pathogen handling laboratories di er from those for human pathogens, 1 and 2, what is get a vaccine. I hope it will be available next year, the right way forward, now I want to look and see precisely when I do not know, it depends on how what Bill Callaghan has to say about what the right quickly one can be developed that can be shown to way forward is because we need to learn from what be safe and eVective. Then, of course, there will be has gone wrong in this case. I am very frank about great demand for it because of the number of that. countries which have been aVected by BTV8 Bluetongue but we need to work very hard to bring one to the market as quickly as possible. Q31 Dan Rogerson: The correspondence published on the Department’s website indicates that Defra staV were aware of the problems with the drains, Q28 Chairman: Are these vaccine developments there was a need for repairs. 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Hilary Benn: Do you mean those who went in and Hilary Benn: The honest answer is it was a weakness did the annual inspections? I do not know? in the system, that is the truth. It was a weakness in the system. Now you go back to how a SAPO licence Q32 Dan Rogerson: The transfer of information. was originally granted, you are going back quite a Hilary Benn: Yes, I need to check on that. The few years, and the regulatory system has evolved correspondence with Defra was about the over time. There is a series of regular inspections replacement of the drains. We have to be very careful where the inspectors go in and check and draw here in how we describe it. It is not the case that things to the attention of those who have got Defra as the licensor and the regulator knew that the responsibility but I think in any licensing drains were leaking in the way that we discovered arrangement you do have that balance of they were leaking, that they were damaged in the responsibilities. It is not unique. way that they were when the HSE went down and had a look as part of their investigations in August. Q35 Chairman: Somebody has got to demonstrate That was not the case. Why was Defra written to? capabilities to meet a licence requirement of safe Defra was written to as the licensor and the regulator containment. Quite clearly that, with the benefit of to be asked, if we change the system, because we hindsight, reality and in fact seemingly the condition know the drains are old, we know they need of this place when it got its licence—when was the replacement but nobody thought, as far as I have last SAPO 4 given for Pirbright? seen, that they were in the condition that they turned Hilary Benn: The last inspection was, I think, in out to be, had that been the case, well things would December of last year. The other thing we have to have been diVerent, “Is it all right if we do it in this bear in mind is the nature of the layout of the drains way”. On funding, I do not know whether we will because it is quite important. come on to funding, but you would not ask your licensor and your regulator to fund works that you Q36 Chairman: No, no, I do not think it has got thought were necessary, and I have drawn the anything to do with the layout of the drains, I am parallel with the HSE, you would not go and ask the talking about what happened when the licence was HSE for money and Defra was not asked for money, granted by the person or persons who had in that respect, yes. information from Pirbright. How did they demonstrate to those giving the licence that they Q33 Chairman: Secretary of State, I want to follow could meet the requirement for safe containment up Mr Rogerson’s line of enquiry. You said that because the rest of the HSE Report says that one bit Defra were the licensing body and it was Pirbright of safe containment, i.e. the drainage system was who had the duty to comply with the terms of the found wanting? Surely, before you get a licence you licence and deliver the requirements for the safe have to demonstrate that the entity of the Pirbright containment under a SAPO 4 licence but if I take the site and systems was capable of meeting the licence provision of a driving licence, I have to go along with requirements? You do not just accept that somebody a driving instructor and demonstrate before his very says, “We can do this”, surely you have to have some eyes my capability as being somebody suitable to evidence. What was the evidence? grant a licence to conduct a motor vehicle on the Hilary Benn: I was just going to come on to explain, highway. Chairman, that the layout of the drainage system Hilary Benn: Yes. and the two part system for inactivating virus is important here because both the Institute for Q34 Chairman: What you have said eVectively is, we Animal Health and Merial had their own activities, defined the terms, they told us they could do it so we obviously Merial produces a much larger amount of gave them the licence. If you read the HSE report virus than the IAH does. They both had their first you will find that they point out that the stage procedures. In the case of Merial, we were requirements for containment level 4 were not met aware that did not completely inactivate, that is true. thus constituting a breach of biosecurity. I just want It then went into this pipe system and there was a to ask you about how detailed the process is that a second stage. The important thing is the second licence applicant has to go through before as a stage process which did finally inactivate any Z Department you can be satisfied that somebody remaining virus so that the e uent which went out meets those conditions. It is quite clear, with the into the system was safe. There was a two part benefit of hindsight, that the systems which were in protection, belt and braces, to ensure this was the place, when the SAPO 4 licence was applied for, case. Now, with hindsight, this bit of pipe work in V were not capable of providing safe containment e ect was part of a high containment system, it was under a variety of conditions about the way in which not to the standard that it should have been, that was this site was operated. I note from page 53, for a fault of the system. example, of the HSE report, it says, “A discussion with the site representatives confirmed that there Q37 Chairman: Just concluding my line of were no routine maintenance instructions or testing questioning, on page 12 of the HSE Report it says, undertaken within either the eZuent or surface “Before any licence is issued, Defra inspectors will drainage systems. Any maintenance is undertaken normally inspect the facility where the work is on a reactive basis”. What I want to know is against intended to be done. A licence will not be granted that background, why did your rigorous licensing until and unless the inspectors are satisfied that the policy not tease out this deficit? management facilities and documented operating Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP procedures comply fully with the standards for the Q43 Mr Cox: But they knew that it was an essential safe containment of the pathogen concerned”. It part of the biosecurity for a live virus and nobody strikes me that that process was found wanting? had taken the step of going directly to have a look Hilary Benn: Clearly it did not work but I come back and see whether “old and due for replacement” to the answer I gave to Mr Rogerson earlier. It is not meant leaking. the case that anybody, either at the Institute for Hilary Benn: That was a weakness in the system. Animal Health or indeed Defra’s licensor and regulator, had any evidence to believe that the drains Q44 Mr Cox: It is not a weakness in the system. were in the state that it turned out that they were. It Hilary Benn: It was. is quite important this because some people have said the drains needed to be replaced because they It was a lamentable piece of neglect by were old. Professor Spratt makes the point himself in Q45 Mr Cox: your ministry. Surely to goodness, Secretary of his report that old does not necessarily mean unsafe, State, it would have been much better to the farming it depends on the system that you operate but communities of this country if you had just admitted undoubtedly a weakness that we have now learnt that Defra made a balls-up. Is that not true? about at great cost in the system is if a bit of drains Hilary Benn: That is not a phrase that I would use. is going to be part of a high containment system— we are now changing that because Merial will not be allowed to put anything into that bit of re-lined drain Q46 Mr Cox: Let us say a mistake. until it has been completely inactivated, they are Hilary Benn: It was a failure in the system and we are going to have to provide now a heat treatment learning from that, which is why— facility, that is something that we have learnt as a result of this—clearly any bit of drain that is part of Q47 Mr Cox: Do I take it that the answer to my a high containment system ought to have a way of question is yes? checking whether in fact it is doing its job and that Hilary Benn: I am trying to answer your question. was a weakness of the system. Q48 Mr Cox: Are you trying to avoid it or answer it? Hilary Benn: No. I am trying to answer your Q38 Mr Cox: Secretary of State, can we agree on a question. If you would just bear with me, Mr Cox, I number of things? The first is that this length of drain will do my best to do so. It was a failure in the was an essential part of the safety containment of the system. We now know that to be the case and we disease; correct? have to put it right and we have to learn from it. The Hilary Benn: It was indeed, yes. truth, Mr Cox, is that the framework we have in place for dealing with all sorts of risks in society evolves over time, in part because you learn from Q39 Mr Cox: The second point is that Defra knew mistakes that happen, and this was a mistake. that the inactivation by citric acid that was applied by Merial did not fully deal with live virus being Q49 Mr Cox: The diVerence, Secretary of State, is flushed down the drain. that Defra is constantly responsible for injunctions Hilary Benn: Correct. and reminders to the farming community of the importance of biosecurity, and what happened here is that Defra’s own vigilance and attention to the Q40 Mr Cox: The third is that it had known for a biosecurity of a plant that was developing live virus considerable time that the drains were regarded as for Foot and Mouth disease was grossly neglected. due for replacement and old. That is the position, is it not? Hilary Benn: That is true, yes. Hilary Benn: I do not agree with that, Mr Cox, and I would just say one other thing in terms of investment on the site itself. Q41 Mr Cox: So we have a situation where an essential part of the containment system which is having live virus flushed down it on its way to the Q50 Mr Cox: Which part do you not agree with? Do Institute of Animal Health’s own neutralisation you agree that Defra is responsible for teaching and facility was regarded as due for replacement and old preaching to farmers about the importance of biosecurity? and nobody knew whether it would be likely to be Hilary Benn: We all have a responsibility for dilapidated and admitting virus into the outside ensuring biosecurity. environment or not; correct? Hilary Benn: Nobody knew that they were in the condition that they turned out to be. Q51 Mr Cox: Would you agree with me that biosecurity means vigilance against remote risks? Hilary Benn: The HSE makes that very clear in its Q42 Mr Cox: They could have been; they might not report, yes. have been. Nobody knew. Nobody had inspected them. Q52 Mr Cox: And so Defra had the solemn duty, did Hilary Benn: Nobody had looked down the drains; it not, to be vigilant against even remote risks that is true. coming out of this plant? Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP

Hilary Benn: Yes, and the regulatory and licensing person was who took responsibility on behalf of inspection system did not pick up this fault, that is Defra for saying that these premises were safe for the true. purpose for which they are licensed? Hilary Benn: Can I reﬂect on that and come back to the Committee if you are talking about the name of Q53 Mr Cox: And neither did people at your the particular individual? ministry pick it up, did not think it was serious enough, despite the gravity of what was being produced there, to go and actually look and Q57 Chairman: Yes. Some part of your empire took determine whether it was still safe. the decision to grant the licence. It would be quite Hilary Benn: And nor did people at the Institute of interesting to know how many licences have been Animal health think that. Therefore, the point about granted and when because it is not clear to me investment, because one of the other arguments that whether the granting of a SAPO 4 licence, bearing in has been put and which you have not put, Mr Cox, mind that the regulations, as I understand it, came in in 1988, is something which is repeated over time or is that somehow it was a shortage of funds that was V responsible. is a one-o . I think that would be helpful to know. Hilary Benn: Okay. I am happy to provide that.

Q54 Mr Cox: I have not said that. Q58 Dan Rogerson: One part that puzzles me is that Hilary Benn: I know you have not, but if I may take what we have heard here is that there was a the opportunity, Chairman, just to make the point breakdown in the overall system which has all sorts for the record, that is not the case because, with £31 of other issues that may need looking at. If you million having been spent on this site as a result of consider that Foot and Mouth disease has caused the Government in 2005 recognising that the one of the greatest crises in recent years up to this facilities at Pirbright needed to be renewed, if the point one would have thought that it would have Institute for Animal Health had thought that this had extra special care taken over what was was that urgent and that much of a potential happening with this virus above and beyond what problem, because—and I come back to my original one might have expected for any other work that was answer to Mr Rogerson—they too had the going on anywhere else in the country. That is what responsibility, and I am not trying to duck Defra’s puzzles me the most, that, as Secretary of State but the body that is licensed has a responsibility too, coming in, if you were to look back over the last few then you might have thought that in the years as to what had been the problems for Defra, conversations about how £31 million is spent the Foot and Mouth certainly would rate very highly drains might have figured and they did not, and, as because of what happened in 2001. That is why I we know, there is a debate and a discussion between cannot understand why it would not have been near Merial and IAH about who is going to pay for their the top of the list to ensure that everything was replacement. absolutely above and beyond what any standard system would have called for. Hilary Benn: Only the people who have been Q55 Mr Williams: I have always thought that part of the problem here was calling this piece of the site a operating the system can answer the question, but I drain, which gave the impression that it was used to have no reason from anything that I have seen or discharge safe material from the site when in fact it heard to believe that people were not doing the job was an integral part of the system and held that they thought they should be doing. However, potentially live virus, but that is another matter. If a what we have discovered is that the system as it farmer was found guilty of one of these sorts of operated was not good enough to prevent this oVences he would be held personally responsible if it happening. Why did it happen? Because of a was thought to be serious enough. Could you tell us combination of a not completely inactivated virus or could you write to us and let us know who signed being admitted into that bit of pipework, and oV the last inspection of this site and said it was safe absolutely it is part of a high containment system for the purpose for which it was being licensed? and should have been treated as such, and that is one lesson to be learned; secondly, the extent of the Hilary Benn: I am very happy to write to the flooding; and, thirdly, ironically, why were there Committee and inform you about the last vehicles up on the site? Because a lot of money is inspection, what was found and what action was being spent on renewing Pirbright. It was that taken as a result of that. If you are talking about combination of events, so the report tells us, which liability and prosecutions, responsibility rests with is the most likely explanation as to how it got out. I Surrey County Council trading standards. They suppose I finish where I started. It should not have have the responsibility of deciding whether any law happened, I am determined that it does not happen has been broken and it is a matter for them to weigh again and I am very sorry for the impact that it has that up. had because it has been great and it has been felt by Chairman: I think Mr Williams was asking a V a lot of farmers up and down the country. I make no di erent question. bones about that whatsoever.

Q56 Mr Williams: I will ask it again. Somebody Q59 Mr Drew: You referred earlier, Secretary of acted on behalf of Defra in the last inspection and State, to the two farm disease outbreaks. You are signed oV whatever it was. Could we know who that very aware that there is a third which is even more Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP insidious in a sense because it just is always there, vaccine. It has not been used but we have the and that is Bovine TB. Some of us were a little opportunity. For Bovine TB it is always ten years surprised to get the Exocet we got yesterday from Sir away but maybe it could be far less than ten years David King. First, who initiated that report and away if we put serious resources into it. At what why, and why did it come out this week, which seems stage do you take a policy decision to say, “Look: we highly suspicious in the sense that there are a number cannot go on slaughtering cattle the way we do. It is of interlocking arguments going on about what is unaVordable, let alone being very cruel. We are happening with Bovine TB at the moment? It just going to move to a vaccination strategy and we are seems a bit strange that it has suddenly come out going to put the resources into this to make it now. feasible”? Hilary Benn: My predecessor asked for the advice. Hilary Benn: In relation to Bluetongue, animal Chairman: When? slaughter is not part of the disease control arrangements. There was a very small number of animals slaughtered at the start of the outbreak, but Q60 Mr Drew: When? Hilary Benn: I cannot tell the Committee the that is not the way in which it is dealt with. In absolute date. I will happily go away and look. I relation to Foot and Mouth, in both phases of the received it in a letter on 30 July. There had been one outbreak we had the vaccination capacity available because that is what the contingency plan said. I or two other things going on, which we have just Y spent the last 20 minutes talking about. I have took advice from the Chief Veterinary O cer and recently turned my attention to that bit of advice, the she took advice from independent scientists, and on ISG report. We reflected upon that. Sir David King both occasions their view was that the approach we wanted to publish his advice. As I have said publicly, are taking, which is very extensive testing and one of the things I want to wait for before taking a surveillance, slaughter, dangerous contacts, looks as view is the result of the inquiry that this Committee if it is working. The Committee will be aware that is undertaking. I would simply say to you, Mr Drew, here we are, two and a half months into this that we thought it would be helpful and Sir David outbreak. There have been eight infected premises in King thought it would be helpful for it to be Surrey and a bit of Berkshire, so in that sense the published now given the inquiry that you are strategy to try and contain the outbreak so far is undertaking. I would simply say that there is nothing working, but I learned in the beginning of September Machiavellian about this. There is not something not to make assumptions, but we would have had the going on. It is a piece of advice that has come to capacity had we needed it, so it is an issue which Government. I thought it was right that Sir David divides the industry itself. On Bovine TB, I am no King should be able to bring it into the public expert but I have asked the question, as you have, and indeed am told it is always ten years away. I do domain. He, as you know, is very keen that his V advice to Government should be published. It is a not know; is that because not enough e ort and view on what the ISG report had to say. From the resource have been put into it? The Committee may two meetings I have had internally looking at this, well be in a better position to answer that question this is a horrendously diYcult issue which polarises than I, but Bovine TB is obviously a real, serious and opinion and in which a lot hinges on your growing problem in some parts of the country. interpretation of the evidence. In terms of how I propose to deal with it now that I have got slightly Q62 Chairman: Let us just be specific. Are you as more time, it is to meet first of all John Bourne and part of your consideration going to consider what I to meet a wide range of organisations which have an would call a spend-to-save policy, that is, to examine interest in this and to listen to what the Select whether more resources put into the development of Committee has to say in eventually reaching a view an appropriate vaccine could fast-forward the use of about what we are going to do. Genuinely, there is that method of controlling this disease on a faster nothing suspicious. There is no subtle message being time track than the scientists say is possible at the sent here. That is exactly what has happened. moment? Hilary Benn: I have not asked that specific question yet because the answer I got to the first question in Q61 Mr Drew: There is one thing in common between Bluetongue, Foot and Mouth and Bovine relation to a vaccine at, I think, the first meeting TB and that is that we look over the hill and see the when I was looking at this was, “It is about ten years possibility of a vaccine. We took evidence a week last away and has been for some considerable period of Monday to look at how far advanced the time”. vaccination search was for Bovine TB. Is there not at least some reason to question judgment inasmuch Q63 Mr Drew: That was ten years ago. that we always slaughter as a first recourse? We Hilary Benn: And that was ten years ago. If someone slaughter cattle and that costs an awful lot of money. were to come and say, “But for want of money we In terms of Bovine TB we are at £90 million a year, could make much faster progress on a vaccine”, I probably soon to pass £100 million. Would it not be think that is something that lots of people would be sensible to invest heavily in each of those three interested in. I am not aware of any evidence that diseases to seek a vaccination solution on the basis that is the case, but I will go and ask the question. that we all know where we are going to? A Mr Drew: It was certainly the impression that we Bluetongue vaccine is possibly within months of were given when we took evidence a week last being available. For Foot and Mouth there is a Monday that there was a resource issue. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP

Q64 Mr Cox: I have asked at least two questions of Hilary Benn: Of course the science is going to be your predecessors in the House over the last two hugely important, but I would not sit before the years and on each occasion they have promised a Committee today and say that practicality is not decision imminently. One can go back to the going to be a consideration also. I am sorry if I have Hansard record to see what the minister of state said misinterpreted your question, Mr Rogerson. to me last summer. We had a three-month consultation and a decision was supposed to be Q68 Dan Rogerson: No; I did not phrase it as well as taken then, and now you are talking about a further I might have done. What I am saying is that that process of consultation with groups who have been would be a consideration that you would have to consulted many times. There must be some take into account but it would not be something you continuity, one supposes, between secretaries of would expect those representing the scientific state in your position and hand-on. When can we evidence to have taken into account, so that you will expect you to take a decision? Parts of the look at the core of what their evidence is countryside are burning. The flames may not be scientifically rather than looking at any conclusion visible but they are there. We saw them ourselves a that may have had a particular gloss placed on it. week or so ago when we went to my constituency Hilary Benn: I would not expect scientists to place a and others in Devon. We need a decision. When do gloss on the conclusions that they have drawn. I will you anticipate taking it? look very carefully at the science but there are other Hilary Benn: I cannot give you a date, Mr Cox, but considerations that have to be taken into account I recognise that people want to know one way or the and obviously the practicality of doing what the other. I make no apology, with respect, for the fact science may indicate could be done is something that that, as someone who arrived in post in June, I will have to weigh up. whatever process my predecessors went through the one thing that there is not continuity of is the body Q69 Chairman: I am delighted you are going to see of knowledge and understanding. That is not Professor Bourne because up to now one of his transferred from one post-holder to the next. concerns was that nobody had bothered to come and talk to him after years and years of work. I was just a bit taken aback that yesterday he expressed surprise Q65 Mr Cox: That is not transferred? that Professor Sir David King had produced his Hilary Benn: This is a pretty obvious statement but document. This was the first he had heard of it. Did in my ministerial career I did not sit down and look they not talk to each other, perhaps just exchange a at Bovine TB as a problem until I arrived in this post few views, before this further work was done? and there have been one or two other things that I Hilary Benn: It was advice to ministers that have been up to over the summer. If I am going to Professor Sir David King produced, but I take your take the decision, and I realise that responsibility point, Chairman, and that is why the first person I falls to me, I want to have the time and the space and propose to see, of all of those who have worked long the opportunity to understand the issue, the and hard on this, is indeed John Bourne. arguments, the options, the diVerent interpretations on the scientific evidence, and that is the process I am Q70 Chairman: Good. going through, but I also recognise the very strongly Hilary Benn: And I am sorry that I have not been held view that we need to know one way or the other, able to do so already but I hope he will understand, and I will reach a decision as soon as I can but I am like the Committee, that there have been one or two not going to apologise for trying to make sure that I other things on the go. take the right decision because ultimately I will be Chairman: There you are. You heard it here first and the one who is responsible. we will be seeing him tomorrow.

Q66 Mr Cox: Nobody would expect you to Q71 Mr Williams: Secretary of State, when you apologise for that and everybody would regard as announced the compensation to the farming reasonable what you have just said, but can you bear industry you indicated that hill farmers would in mind when you go through this process of receive round about a third of their hill farming deliberation that at least one secretary of state and allowance by the beginning of November. Given the numerous ministers of state have promised the record of the Rural Payments Agency on these farming community and the countryside an answer matters, how much conﬁdence have you got that imminently for two years now? that payment will be made? Hilary Benn: I am acutely conscious of that. Hilary Benn: I really hope it is going to be paid by then because that is what I have told the House.

Q67 Dan Rogerson: When you are considering all Q72 Mr Williams: Are you talking to the Rural this evidence, and it is diYcult when there are Payments Agency with a view to establishing conflicting scientific reports, can we have your whether that will happen? assurance that you will be looking at the science Hilary Benn: You can rest assured, Mr Williams, rather than any interpretation about practicalities of that in considering that as a route of providing some measures which may have been placed on top of that assistance, and I stress the phrase “some assistance”, scientific evidence in terms of reports that have been yes, we asked the question, “Can you do this?”. Since produced? I arrived, in relation to the Rural Payments Agency, Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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23 October 2007 Rt Hon Hilary Benn MP my main concern has been that, given the long and the Committee that they can run that in relation to diYcult history of the RPA, which your Committee all of the farmers who have been aVected by Foot has looked into in great depth, the one thing that we and Mouth because I cannot. have to ensure now is that it does the things that it says it is going to do and meets the targets that have Q75 Mr Williams: If you are able to make this one been set by my predecessors and by me, because that third of the hill farming payment early in November is the best way to restore credibility after a very that assumes that you really know how much hill torrid time. I attach great importance to that. farming payment each farmer should have, so why can you not make the whole of the hill farming payment plus the compensation at the beginning of Q73 Mr Williams: When you made the November? announcement I think you indicated that the Hilary Benn: Because it is a 30 per cent payment compensation did not match the losses, and indeed based on what we know we paid them previously, you have written to me subsequently and said that not 30 per cent based on what we think we are going you thought the losses to the farming industry were to pay them, because they are still going through the around a million pounds. One way that would be system and trying to identify what that sum is. We helpful is if the single farm payment could be made asked all of the questions that you have been putting early in the window as well. What shape are the to me and came to the conclusion that the method Rural Payments Agency in to make that sort of that we have taken for this £8.5 million support was payment, even on an interim basis? the simplest and the quickest and easiest method of Hilary Benn: The shape they are in is that, as you getting it to a group of farmers who have been know, they slightly exceeded the target that was set particularly aVected, and that is why I decided to go for payments by the end of June 2007 and their down that route and not the others. targets for this year are 75 per cent of full payments by the end of March 2008 (the comparable figure last Q76 Mr Williams: Of course, it is not just the year was 38 per cent) and 90 per cent by the end of farming industry that has been aVected; it is rural May. I have indeed asked the question and I have businesses as well. not made the promise that they will do that for the Hilary Benn: Indeed. reason that I have just set out. It would be easy to say we will try and see but I am not prepared to make Q77 Mr Williams: Is the announcement you made promises that cannot be kept because I think it on the Monday at the beginning of Parliament an would undermine credibility in the recovery interim announcement or are you looking to clock programme. I pay tribute to the work that Tony up the total losses and try to make some V Cooper and all of his sta have been doing to get compensation in that league? themselves from where they were to where they now Hilary Benn: No, I am not looking at further support are and where we wish them to be in meeting targets payments because, as I have said very clearly, it is and I do not want to jeopardise that. I understand not this Government’s policy and never has been the absolutely the argument, “Can you not bring it policy of any government to seek to oVer full forward?”. I have formed the view that it might compensation in those circumstances. We have done jeopardise the achievement of those other targets two things. One is to look at the particular and you would not forgive me if that happened, diYculties that the industry has been facing, and that would you? was encompassed in the package that I announced, and the other things as well as the payment that we have just been discussing, but it is pretty obvious Q74 Chairman: But what we could say is, have you that the most useful thing that can be done is to try evaluated whether there is any ability for the RPA to and enable the restrictions to be lifted to allow prioritise payments? I can understand why you are people gradually to get back to normality. I conservative with a small “c” about fast-forwarding recognise that normality is going to be very diVerent the payment window, of changing those for quite some time to come but I hope that the arrangements, but clearly, when it comes to getting industry would recognise—and it goes back to the money to hill farmers in the first instance as opposed questions that Mr Gray was putting to me—that we to arable farmers who may have done reasonably have done that in really close partnership with the well, one can see the attractiveness of that strategy. industry and we have seen the benefits of that in the Is that being looked at? very considerable easing of restrictions that most Hilary Benn: Indeed, getting support to hill farmers farmers have now seen, but I recognise that this early, and that is why I took the decision that I did could not have come at a worse time in the year and about the 30 per cent or so payment, and that will there is a residual impact. come earlier than a brought-forward single farm payment would come in any event. Yes, I have asked Q78 Mr Williams: On that point you make, we are that question, and in the end we took the view that very pleased that the export of carcasses has we would run risks in doing that which would resumed. Most ordinary farmers find it very diYcult jeopardise what I hold dear in relation to the RPA’s still to access the export market because of the recovery and I did not want to take that risk. restrictions that the animals have to go straight to However, in relation to serious hardship cases, the the slaughterhouse, that no lambs can go for export RPA does have a mechanism but I cannot pretend to from farms that have had any stock come onto them Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 92 Environment, Food and Rural Affairs Committee: Evidence

23 October 2007 Rt Hon Hilary Benn MP in the last 20 days and various other conditions. Are Q81 Mr Williams: Can you perhaps then help us you making representations to the European Union with the mystery of the draft of your statement that on that matter because unless you can ease those you made to the house on 8 October, which Richard restrictions export does not really mean anything to Lochhead, Cabinet Secretary for Rural AVairs in the the majority of farmers? Scottish OYce, says had indicated that £8 million Hilary Benn: Indeed we have been making was going to be provided for the Scottish Parliament representations and at SCoFCA last week— and £6 million for the Assembly to help pay compensation to farmers in those devolved nations, but which never saw the light of day on 8 October? Q79 Chairman: Would you like to explain what that Hilary Benn: Mr Williams, as I think I have told the stands for? House, I am not going to comment, for reasons the Hilary Benn: The Standing Committee on the Food Committee will understand even if it does not like, Chain and Animal Health. This is the veterinary on discussions that take place between colleagues, or committee which meets and takes decisions about indeed on options that Government looks at. European restrictions in relation to disease. What Government does that all of the time. The position is they agreed on Friday was that they would increase the one that I announced to the House of Commons the area in which export and meat products can take when I made that oral statement on the first day back. That is the Government’s view and that place, so that includes, for example, Norfolk and includes each of us picking up the cost of the things SuVolk, because we put, if you like, a kind of buVer that we think it is right to pick up. That includes the zone around Surrey, the risk area, and then when Scottish Executive in relation to their light lamb Europe allowed a resumption of meat product scheme and I think they are looking at a further exports originally on 12 October, I think it was, we V package of support, judging by what is in the put a bigger bu er round; we extended it as far as newspapers, and that is certainly true of the Welsh Herefordshire. They have reduced that in size. Assembly Government in relation to their light lamb Slaughterhouses slaughtering animals for export can scheme and the decisions I have taken about the now be located anywhere in GB except in Surrey, so money that I am going to expend, and that has come that is a change and the industry has welcomed that from each of our budgets. very considerably, and there is one slaughterhouse, Cheales in Essex, where a large proportion of UK cull sows were slaughtered for export, so that is now Q82 Patrick Hall: I was fascinated to read of Defra’s in play again and can be used. Previously, animals contingency fund for exotic animal diseases because which were going to be slaughtered for meat exports not only does it refer to Bluetongue, which I have needed to be resident on the holding for 30 days. never heard of in my life; it also lists fascinating This has now been reduced to 21 days, and the things like African swine fever and West Nile virus direct-to-slaughter requirement is also being as possible visitors to these shores, so we face a very diVerent situation in the future. It is in the context of removed and that allows for multiple pick-ups from Y farms to the slaughterhouse. There are also some the risks and uncertainties and costs and di culties other changes in relation to standstill periods. That associated with all of that that you are raising the is as a result of the representations that we had made. issue of sharing costs and responsibility, which we have already had some discussion on; you raised it In the end SCoFCA takes its decisions based on earlier on this afternoon. Mr Gray described it as the managing the risk but it shows the benefit of the co- Government abdicating its responsibility. I will put operation we have had with Europe in trying to ease another point of view. Perhaps what it could be, in restrictions and enable the industry to get back to the face of these great challenges, is a greater business in the same way as we have done with the recognition of the need for Government and partnership. industry to work together. Secretary of State, you are going to consult industry and also the devolved administrations. Would you feel able to elaborate a Q80 Mr Williams: Can you tell us why Defra are not little bit on what you have said about what the new introducing a welfare scheme for the light lambs that landscape might look like in terms of these shared would normally be exported to southern Europe costs, responsibilities and the development and when the devolved administrations are introducing implementation of policy? What might the new that scheme? situation look like over the next couple of years and Hilary Benn: First, because I have not, with my what do you think the key diVerences might be from responsibility for England, received the same level of the current situation that we have been used to? representations in favour of doing that. Secondly, I Hilary Benn: They are all yet to be resolved. Of the think welfare disposal schemes have diYculties two key diVerences one would be that the authority involved in them but I recognise that the position of making decisions about movement restrictions that the devolved administrations and farmers there we have just been discussing would look diVerent is diVerent, and I think it is right that each of from what it is now, ie, the holder of this oYce. The the administrations should respond to the second thing that would look diVerent is how the circumstances as they find them. It is not something, cost of handling animal disease is shared between the for example, that the NFU have pressed upon me, taxpayer, Defra and farmers. I think the one issue but that recognises the diVerent circumstances in that we will have to address is that if you think of the England as opposed to Scotland and Wales. Veterinary Service and you think of animal health, Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 93

23 October 2007 Rt Hon Hilary Benn MP in relation to some diseases, including the zoonotic plugged into that mechanism which shares direct ones, the Government obviously has to have a responsibility are there not risks of being criticised capacity, expert advice, people capable of doing for diverting resources to just another layer of things. How do you maintain that and who then bureaucracy? provides and pays for the kind of very intense Hilary Benn: I can assure the Committee that I am activity that we have seen in Surrey and elsewhere in not interested in another layer of bureaucracy handling Foot and Mouth? Anyone who has been to coming out of this process. Clearly, one issue is what the local disease control centre in Guildford will would this new authority that takes the decisions have seen the very large numbers of people who have look like? How would it be made up? Who would be been going out doing the blood testing and the on it? How would it reach its decisions? However, I inspection and so on. I do not know the answer to it am clear that that would replace the functions that yet, but, question: how should that be paid for? That the holder of this oYce undertakes under the current is what the purpose of the consultation is about. I arrangements, and you would have to decide where really do look forward to sitting down with the you drew the line because there would be decisions, industry to have that conversation. I know it is a again, if one is talking about zoonotic diseases, diVerent way of doing things. Mr Gray shakes his about restriction on animal movements if it had head. an impact on human health. Obviously, the Government has got a real and continuing interest in Q83 Mr Gray: Simply because what you are saying this, but in relation to diseases where there are no is that the industry is going to pay loads of money for human health implications you can envisage a V something which it does not want. I would like to be di erent system operating. I just hope that the party to your consultations with them because you industry will embrace, I was going to say, the are going to get a thick ear, are you not? opportunity that this provides. Not everybody may Hilary Benn: I do not know whether we are going to be totally keen on doing so. get a thick ear but the industry— Q86 Mr Gray: Er, no. Q84 Mr Gray: You are. I am not daft. Hilary Benn: I know, and I understand that point, Hilary Benn: If one looks at any other area of but I think it is the right direction in which to go activity, those who are producing take responsibility because one good way of looking at it is to ask the for managing the risks associated with the economic question, if you were designing it from scratch would activity they are engaged in. One can look at bits of you design it this way, and the answer is you the farming industry, the pig sector, for example, would not. where diVerent arrangements apply, and there is a Mr Gray: Chairman, on this particular subject, it is very high level of biosecurity. I think if you were huge and it would be a very fundamental change, starting again the truth is you would not start with and I think we ought to have a separate session on it. the system we have got; let us be frank with each other. I do not think that you would. The question Q87 Chairman: I am sure that that will occur in the is, when you are talking about change how do you fullness of time when the Secretary of State is able to move from something that people know and may be make a little more clear to us exactly what he has in comfortable with bits they do not like? I think the mind. I would be interested to know whether the deal is that insofar as the industry says, “You are thought of burden-sharing goes beyond the direct taking these decisions about movement restrictions costs of handling the animal disease, because one of and so on. We would like to do that”, I think that is the lines of questioning that was being pursued the gain, Mr Hall, for the industry, in relation to earlier was, if you like, the consequences of these changes. Question: if you are taking those movement restrictions in the uplands. In other decisions to what extent is it fair and reasonable to words, is there going to be a collective share of that? say that you should be covering the cost of taking I just wonder, and in fact this is something you might those decisions? That is the fundamental argument. like to come back to us on, how much work you have I do not think it is unreasonable. It represents undertaken on the economic potential of the change. I can understand why some people would livestock industry under diVerent scenarios of prices say, “I do not fancy the change, including picking up received for product to take on board the ﬁnancial the cost”, but I think it would be a better way of burden. There might be intuitively a nice idea of doing things (my view). The consultation is going to sharing decision-making if prices for the livestock have to show how we try and get from where we are industry’s output are high, but if they are low there now to where I think quite a lot of people would may be diYculty in them bearing the burden on a recognise we ought to be in future, but I grant you, continuing basis. I presume all of that is going to be Mr Gray, that that might not be everybody in the looked at. farming industry. Hilary Benn: Indeed, and I was discussing that very issue just before I came to the Committee this Q85 Patrick Hall: Are we talking about the afternoon with Sir Don Curry, because I do think possibility of setting up another interim that that has got to be part of the conversation that bureaucracy, because if there are costs there, and Mr we have because in the end people will have to look Drew asked earlier about whatever money is going and ask is this workable? It comes back to the point should we not be investing in long term research and about practicality. I would be very happy to discuss that sort of thing, unless the industry is very much that with the Committee further when we have got Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 94 Environment, Food and Rural Affairs Committee: Evidence

23 October 2007 Rt Hon Hilary Benn MP our thinking a bit more developed and when we have Q92 Chairman: No, we are delighted because I think had the chance of doing the consultation which we you very kindly admitted that there is an issue to be want to get on with. addressed. Chairman: Good. We have got 12 more of your Hilary Benn: It is a horrible word, but there is a valuable minutes and I want to move to David Drew debate and people have written to me and raised it who is going to talk about the Common Agricultural and so on. It is always wise to check the approach Policy health check. that you are taking against circumstances that change. I suppose my second answer in relation to Q88 Mr Drew: It is a very minor topic! Is it CAP reform is that we did set out in that document, frustrating for you to come into Defra and then to which I have read but I will happily re-read, realise that you do not have control over food policy particularly that section—now I have been given inasmuch as the key agency, the Food Standards homework by the Committee!—sets out pretty Agency, still reports to the Department of Health clearly what it is that we are seeking to achieve but and that if you want to have some impact in terms of I do not underestimate the diYculties of doing that some of the issues to do with the chain that food because, notwithstanding what we have just spent needs to pass along that must limit your room for the last whatever talking about, I spent the whole of manoeuvre? yesterday at the Agriculture Council, two and a half Hilary Benn: The honest answer is that that is not hours on wine reform, where reform is definitely something that I have been worrying about in the needed but it is quite a diYcult process to achieve it. last three and a bit months. I have got more than enough to be getting on with without getting on with anything else. Thank you for the oVer. Q93 Chairman: Did you do anything about consumption? Q89 Mr Drew: I will give you something to worry Hilary Benn: Did I do anything about consumption? about then, which is the debate going on about food As a teetotaller I have already made my own security at the moment. The Government has had, I contribution. would say, a pretty laissez-faire approach: “The Chairman: Oh, well, it was worth a try. food is there, wherever it comes from is not our problem”, and yet we have seen with climate change, we have seen with the impact of flooding, certainly Q94 Mr Drew: Just in terms of the idea of the health we have seen with the steady rise in prices, that that check, one of the dilemmas I have is that in terms of does have a wider impact on the Treasury, if not agriculture we are now such a diverse community is Defra alone. To what extent do you think you ought it not about time that we recognised, considering it to re-think the laissez-faire approach and be much still is 50 per cent of the budget, that it is very diYcult more interventionist to make sure that we grow to have a transnational agriculture policy? There are enough of our own food and the right sort of food? so many variations between diVerent countries that Hilary Benn: I think it is an issue we need to think really this is something that we could let go of. I am about. It is when you got on to the word not normally one who talks about flexibility but if “interventionist” that I began to pause because it you wanted an area where there could be flexibility depends what you have got in mind. with a greater degree of popular support, this is one of them. Q90 Mr Drew: You know what I have got in mind Hilary Benn: I do not think that is where we are at but it may not be what the Government has got in or Europe is at and we want some things out of the mind. Common Agricultural Policy, as set out in the Vision Hilary Benn: With a changing climate out there a statement, not least expenditure on the public goods policy which is based on, “We can get the food from that we want out of farming and agri-environment somewhere in addition to the food that we grow schemes and moving away from the support of the ourselves”, we do need to ask ourselves the question past. We cannot ignore the history. The Common is it going to be available in the same way because, Agriculture Policy and free movement in industrial yes, food security we should be concerned about in goods were the two bits of glue, if you can have two the same way that we are concerned about energy bits of glue, that came together and stuck to the security. I do not know what conclusions you would political vision that created the European Union in draw but I am open for a debate on the subject is the the first place, and it has worked very well as a way first point I would make. of avoiding wars, but that is another issue. It is an evolutionary change and the health check is a really Q91 Chairman: The first thing I want to say is that important opportunity to build on changes that when the current crisis is out of the way will you have been hard fought for, including By Britain. I undertake to re-read the Treasury/Defra Vision pay tribute to my predecessors for the eVorts they document, which is now your current starting point have made, in particular my predecessor but one and on food security and is somewhat dismissive of the what happened in I think 2003. We want to see some line of argument that you have rather adventurously very clear changes. We have set them out in the now put forward? Vision document and we look forward with great Hilary Benn: I thought the purpose of coming before interest to what Mariann Fischer Boel produces the Select Committee was to say what you think. shortly. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 95

23 October 2007 Rt Hon Hilary Benn MP

Q95 Chairman: You have set them out in the Vision from my discussions with her, is committed to this, document but you are now going to be confronted but you have 27 Member States that you have to deal with the reality of what Commissioner Fischer Boel with, all of which have very diVerent interests, as trots forward, so that is her vision, not your vision. yesterday’s debate about wine reform demonstrated If we take the Rural Development Policy, one of the very clearly. main areas of criticism has been that the current allocation arrangements of those monies do not Q97 David Lepper: France takes over the Presidency favour the United Kingdom but the challenges in of the EU, I think, in just under a year’s time. In view terms of environmental policies, rural economic of some of the things that President Sarkozy has development policies and other policies associated been saying recently are you preparing for a new with the regeneration of rural economy still leave us vision of the CAP to be part of his programme for in a situation where we are short of funds, if you like, the six months that will begin next summer? from within the European Union’s allocative Hilary Benn: It is a very interesting question because mechanism and therefore we obviously have to we all read what he said with great interest. I pursue from the United Kingdom standpoint higher discussed it with my French opposite number levels of modulation. Our farmers disagree with yesterday. I think in truth we are all waiting to see that. Mrs Fischer Boel’s leaked statement looks as if what exactly it means in practice. I presume at some she is moving towards us but not all of our way. Do point that the French Government will set out you think you will be pursuing vigorously and exactly what it has in mind and no doubt this will opening up the mechanism for the allocation of have an impact on their Presidency, but I do not money for rural redevelopment? think we know anything more in truth than what we Hilary Benn: I will be pursuing a number of things read in the speech, the extracts that we have seen. when I know what her proposals are. I know that there have been versions of it appearing but it would Q98 Chairman: Secretary of State, it is 18.29. There not be appropriate for me to comment on those. is lots more we could ask you about. We have been terribly self-restrained, but thank you very much indeed for answering questions on a very wide range Q96 Chairman: I do not expect you to, but as a point of issues. It has been a good exchange for your first of principle the old mechanism, the existing encounter with the Committee. I get the impression mechanism, does not favour the United Kingdom that you would be happy to come back and see us on because at one time the United Kingdom did not some of the more specific issues, particularly in the want to make claims on it, and if you are looking at case of the CAP health check, and indeed your V allocations on a historic basis we do not start o proposals on the livestock industry when those from a very good position, but the world has moved programmes are more clearly defined, and indeed on in terms of rural regeneration, so, without there are others that my colleagues are adding in as commenting on a specific, as a general point do you well. We will look forward to booking you again for think Europe as a whole needs to re-examine the another very interesting exchange. rural redevelopment aspect of the Common Hilary Benn: I shall look forward to it, Chairman. Agricultural Policy, because in this Committee’s last Thank you very much. Can I just make an oVer, if report on the CAP we said, “Scrap the CAP but it is all right, which is that in addition to the formal replace it by a rural policy for Europe”, which was sessions, if—and it is entirely a matter for you—as a much more all-embracing view of what should be the Committee you would find it helpful to come and happening about rural life, rural economy than have an informal conversation at any time about simply focusing solely on farming. things that are going on, I would be delighted to Hilary Benn: I am aware that that is what the see you. Committee argued for and that is not where the health check is going to be, but certainly one of the Q99 Chairman: I have to say that the department has things that we want to try and get out of this, as we always been very courteous in that respect, for which know, is a movement from Pillar 1 and Pillar 2, but we are very grateful, and I would just like personally there is a range of things that we want to make to close by putting on record my appreciation for the progress on in relation to the health check and, as is high level of communication between the Committee often the case in Europe, in the end countries may and ministers over the recent animal disease not get all the things they would like to get out of it outbreaks. It is very much appreciated. Thank you but I have no doubt in my mind that this is a really very much indeed. important opportunity for Europe to build on the Hilary Benn: I am very lucky to work with a lot of reform process. I know that Mariann Fischer Boel, very good civil servants, so thank you. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 96 Environment, Food and Rural Affairs Committee: Evidence

Wednesday 21 November 2007

Members present:

Mr Michael Jack, in the Chair

Mr GeoVrey Cox Sir Peter Soulsby Mr David Drew Dr Gavin Strang Patrick Hall David Taylor Lynne Jones Mr Roger Williams David Lepper

Witness: Mrs Helen Ghosh, Permanent Secretary of State for Environment, Food and Rural AVairs, gave evidence.

Q100 Chairman: I would like to welcome Helen current outbreak of avian influenza—of course it is Ghosh, the Permanent Secretary for the Department still relatively early days—we think might cost us of Environment, Food and Rural AVairs and say at about £3 million. the outset how grateful I am for your kindness in coming before us at relatively short notice. You will have read—as we have read—some articles in the Q101 David Taylor: Can I just ask, are you giving newspapers which have raised some quite serious expenditures that were not anticipated and are issues about Defra’s budget both now and in the beyond the budget which you are working to? future. Whilst I accept that as a department you may Mrs Ghosh: This is unanticipated expenditure. Let still have decisions that are to be made about your me give you the example which does then link future expenditure—bearing in mind the CSR through into the CSR issue and to what extent we covers three financial years—we thought it provide for an unallocated margin, a reserve to use important to invite you to clarify in some detail we a non-technical phrase— hope the situation in the light of the reports that have occurred in the press. However, before we get onto the Comprehensive Spending Review settlement I Q102 Chairman: You have one of those in the would just like to start, if we may, with the present current financial year. financial year, 2007/08. In the last financial year you Mrs Ghosh: No, we do not have one. As I said to the had to make some uncomfortable choices and make Committee before, as we slow down areas of our some in-year savings and I think that before we get spend towards CSR what we have not had space this into the future it would be helpful to know whether, year for is a departmental unallocated provision. as far as the current financial year is concerned, you The kinds of costs that we are talking about here are are contemplating making any further reductions in the additional costs, for example staV costs—it is your expenditure over and above the levels that you mainly staV costs actually, it is not compensation are currently committed to. costs—for all the surveillance that the animal health Mrs Ghosh: Thank you very much, Chairman, and I teams have had to do, getting in additional local must say I am more than happy to come along and Y clarify what I think has been rather a confused veterinary o cers and so on. The floods—the Defra picture in some of the media. Indeed, I was going to element of that—probably around £30 million. We start telling the story with this year because I think, have about £65 million in the current year which was again, some of the information that is out there was unbudgeted for, which we are continuing to rather confused. To look at this year, as you know monitor, which we are obviously talking to the we have been monitoring our expenditure—I was Treasury about in terms of the on-going mitigations talking to the Committee about this in the summer we can make elsewhere in the programme and that extremely closely—and at this stage in the year, so will be an on-going dialogue we will have with them. half way through the year, we are still showing We also have, as you know from the discussion we potentially—but we are only half way through the had in the summer, some overspend on the year and I will say a little in a moment about the administration budget but we are taking very tight mitigation activity that is going on—some action there. We have had eVectively a recruitment overspend. The largest chunk of that overspend is in freeze, apart from some absolutely specialist posts fact in relation to the unexpected emergencies that that we need. We have had very tight controls on any we have faced this summer and again to give the discretionary spend of a variety of kinds, including Committee some precise feel for the expenditure obviously management services, advice and challenges that have presented and to clarify the consultancy and we are continuing to monitor the matter I am very happy to say what those are. So far, situation. At this stage in the year, particularly with for example—this is obviously still an on-going some of the actions we put in place, we think that situation, particularly in terms of surveillance—the overspend will come down and, as I say, we are outbreak of foot and mouth we think is costing us talking to the Treasury about this unexpected spend around £32 million in the year. About £1 million so that has come in as a result of those particular far is on bluetongue, again surveillance issues. This emergencies. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 97

21 November 2007 Mrs Helen Ghosh

Q103 Chairman: Just to enable us to be absolutely Q112 David Taylor: Just for clarification, the figure clear, you have £32 million which at the moment you of £286 million I think you were suggesting that judge to be the cost of foot and mouth; £1 million for would be the predicted out-turn for 2007/08 which bluetongue; £3 million for avian influenza. itself would be £50 million over. Is that what you Mrs Ghosh: The current outbreak. are saying? Mrs Ghosh: No. What I am saying is that the Q104 Chairman: Yes, the current situation because administration budget for the department—just for you made it very clear that this was the half way the core department, it does not relate to our point in the year. You have an overspend on executive agencies because their administration is administration but you are trying to control that. covered by programme spend and we may get on to Mrs Ghosh: We are trying to control that in a variety explore that later—the anticipated overspend on the of ways. administration element of our budget at the moment looks as though it is running at this half way point in Q105 Chairman: What is the figure for that? the year and before all the mitigating actions that we Mrs Ghosh: Again there are various actions we are take (and as I say this has been coming down over taking to bring that down and we will be looking at recent months) to be around £50 million. That is if a variety of ways, both of reducing it in total and also we carry on as we are now, but we are not carrying classification of some of the spend. on as we are now.

Q106 Chairman: How much is it? Q113 David Taylor: It would be about £50 million Mrs Ghosh: About £50 million I should think on a overspend and it would be a ﬁgure of £286 million. budget of £286-odd on admin, but there are a variety Is that what you are saying? of things we can do to mitigate that risk towards the Mrs Ghosh: No, £286 million is the budget. end of the year.

Q107 Chairman: So that I understand that, is that Q114 David Taylor: If you do not get it back under £286 at the half way point? control it will be £319. Mrs Ghosh: No, sorry, I am talking about the total Mrs Ghosh: If we do not get it back under control year spend. that would be the case. The point I was making is that because it is administration expenditure it is not in fact relevant to a lot of the discussion we are here Q108 Chairman: So you have a total administrative expenditure of £286 million and at the moment you for which is about programme expenditure. are £50 million over the budget. Mrs Ghosh: No, if you predict it to the end of the Q115 Chairman: Before we get to that bit I think you year from where we are now. have surprised the members of the Committee because if you are halfway through a budgeted Q109 Chairman: Right, so you could be £50 million programme and the trend of the expenditure over; that represents 20 per cent overspend if you do indicates that you are £50 million over the top now, not get it back under control. it sounds as if it could be rather painful to get it back Mrs Ghosh: Exactly. We are only half way through to the £286 million which is where you want to be. In the year and there are a variety of things that we can other words, you have got another six months to do to get that spend under control. take £50 million out of your administrative budget. Mrs Ghosh: Indeed we do. Q110 Chairman: How has it got out of control? Mrs Ghosh: I think this is repeating to a large extent How are you going to achieve that? the debate that we had in the summer. Q116 Chairman: Mrs Ghosh: That is why we are putting pressure on our management consultancy spend; we are having Q111 Chairman: We are just working up to speed on eVectively a recruitment freeze; we are working very this; you are getting us thinking about it and I must closely with some of our suppliers; we are, for admit that the idea of being over the top by £50 example, moving out of some of our buildings. As I million on a £269 million budget is a big overspend said to the Committee in the summer about half of by anybody’s stretch of the imagination. You told us our administration budget is people and around half when we last met you that you had better systems in are broadly speaking ﬁxed costs. That is why it is place to monitor your expenditure. diYcult to slow it down quickly but not impossible, Mrs Ghosh: Yes, we have indeed much better and those are all the steps we are taking. systems in place and that is the mitigating action that we are expecting to take in the last six months of the year. I hasten to add that this is administration Q117 Mr Williams: It does seem to me incredible spend; it does not impact on programme spend that you are half way through the year and you have which I think is a large part of the subject of this to make a £50 million saving out of what is only half discussion. a year’s budget. You have presumably spent now Chairman: That is why I am separating where we are somewhere round about I should imagine £134 this year from the questions that we will ask you million plus £25 million and you have to get that £50 about next year. David, do you have a question you out of round about £139 million. That is about 40 want to ask? per cent reduction. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 98 Environment, Food and Rural Affairs Committee: Evidence

21 November 2007 Mrs Helen Ghosh

Mrs Ghosh: As I explained to the Committee in the Q122 Chairman: It is a very important point. If you summer the profile of administrative spend that was have to divest yourself of long leasehold buildings agreed for the SR04 period always had this falling oV you could be in for big bucks because of the in the third year presaged on the basis that the head remainder of the lease or if you sell it at a time when count numbers for the department as a whole would commercial property sales are not particularly high be substantially less than they are now. For all sorts how can we be assured that you are getting best of good reasons in terms of additional requirements value? on the department that prediction did not come Mrs Ghosh: I think that was the point of the answer right. We had made significant reductions, as you I gave earlier that we would only leave a site if it did know, of our staV numbers in this year. I just want represent best value. What we have done in such to say to the Committee—and I am being very open cases—and again I am very happy to give you a note and clear about this because I do not want to hide on that particular site—is to make a calculation any of these issues—we have a variety of mitigation about whether or not we are both getting best value actions in place; we are half way through the year and is this the best time in the market to do so, and and we will be working as hard as we can to reduce then we will reach a view with the Treasury. that administrative overspend as far as possible. However, this is not relevant to a lot of the issues we Q123 Chairman: The reason I raise that is that you are discussing today. have just indicated that this is one part of your Chairman: I am afraid you have alerted the interest strategy to try to reduce your overspend. of a lot of colleagues so I am going to start with Mrs Ghosh: Yes. Gavin, then Peter, David and David. Q124 Chairman: It does not sound to me that these Q118 Dr Strang: When did you start putting these plans are terribly far advanced. mitigation measures into place? Mrs Ghosh: Indeed they are far advanced. In the case Mrs Ghosh: At the beginning of the year. of leaving the Guildford site staV who were working in particular for our IT team have already started to Q119 Dr Strang: If the mitigation measures have to move to London or Farnborough. deal with the £50 million predicted overspend, that means at the beginning of the year although you had Q125 Chairman: So Guildford is good value for £286 million allocated to administration you did not money then? see that as something that could be done without Mrs Ghosh: Guildford is good value for money and making drastic cuts. it is in one of the leafy suburbs of Guildford so the Mrs Ghosh: We knew at the beginning of the year site has a high value. Of course we are going through that we had to start tightening the screws all the business case analysis before we do any of significantly and we did start tightening the screws these things. significantly, particularly around, for example, discretionary spend which has a very tight process of Q126 Chairman: So you can oVset capital receipts approval at board level for discretionary spend against the administrative budget? above particular levels. We put in place the project Mrs Ghosh: Again I would be happy to give you a V to reduce our sta numbers. It is a position which note on that. slightly changes every year but around 300 staV have left on voluntary terms over this year to bring our head count down to hit our SR04 target. We have Q127 Chairman: In terms of the accounting you can significantly reduced our spend on management do that, can you? Does it not go back into a consultancies and other discretionary spend. It is central pot? more diYcult—this would be true of all Mrs Ghosh: In this case we have reached an departments—to reduce some of the fixed costs, for agreement with the Treasury about the amount of example estate costs, but again we are very far capital receipt we keep for ourselves. We are advanced with negotiations to leave some of our certainly keeping a capital receipt out of leaving the properties, for example our Guildford site. We have Guildford site. It is not just going back into the both started the mitigation early and will be consolidated fund. continuing with it. Q128 Sir Peter Soulsby: Given the scale of this potential overspend, the fact that we are so far into Are these long leasehold sites or Q120 Chairman: the year already and the fact that you have drawn freehold sites? our attention to the fact that so many of these admin Mrs Ghosh: We would only leave a site if actually it costs are fixed, it was not without significance that I made us money to leave it. think you used the phrase “as far as possible” you would deal with this. The fact is that you are not Q121 Chairman: You did not answer the question. going to make it, are you? The question was: are these long leasehold sites or Mrs Ghosh: We will do the best we can to make it. are they freehold sites? Do you lease the building in Obviously if it looks as though we are not going to Guildford or do you own it? make it then we would have to reach some Mrs Ghosh: I would have to come back to the agreement with the Treasury about how we handle Committee on that. the issue. However, as I say, this is administration; it Processed: 11-07-2008 00:21:03 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 99

21 November 2007 Mrs Helen Ghosh does not aVect the kind of programme spend on the Mrs Ghosh: Just to clarify, I quoted some figures outcomes that were the subject of the media which I think amount to around £65 million—if I am speculation. This is administrative spend. doing my maths correctly—of programme spend which is that. That is around £32 million on foot and mouth, around £1 million which is being handled Are you able to give us an Q129 Sir Peter Soulsby: very much with the foot and mouth teams on absolute assurance that if you were to fail to make it bluetongue, £3 million currently on AI and around it would have no knock-on eVect on programme £30 on floods. So £65 million is programme spend budgets this year or in any future year? and those are the emergencies and then there is £50 Mrs Ghosh: There is a separation, as you know, in million at the moment—but there are all these Treasury accounting between admin spend and mitigating actions that we are taking—which would programme spend. We would be—and indeed are— looking at admin as a sealed box for this purpose. be admin. They are two quite separate things. There is, of course, a link in the longer term and this comes back to one of themes of CSR discussions Q133 Mr Drew: You are saying that the £50 million about having a simplified set of programmes and you would have wanted it not to have happened but outcomes that you are trying to achieve. One of the regardless of the crises that you have had this £50 key determinates is of course people and what million has come about through every day events. people are doing and a lot of the fixed costs are Mrs Ghosh: Exactly, every day events, absolutely. almost a multiplier of people and where people are. There is a relationship in that sense between the size and shape of the organisation and some of our fixed Q134 Mr Drew: How do you separate them? costs and some of the choices you then make about Mrs Ghosh: We separate them very carefully for all suppliers. You need to have people to deliver things sorts of reasons, not least to do with EU support. so there is a relationship when you think about the The moment the crisis starts we ask the animal programme spend. health team in particular, since they have obviously been in the forefront on this, to separate out the additional costs to them (which are programme You mentioned 300 voluntary Q130 Mr Williams: costs because their people are paid for through redundancies. programme spend) of the outbreak and so they keep Mrs Ghosh: Yes. a very detailed tally (which in the end I am sure the NAO and others will be looking at and of course the Q131 Mr Williams: In order to achieve this scale of current Anderson review of foot and mouth will savings are you going to have any compulsory look at) to identify the separate spend over and redundancies and are you negotiating on this? above the business as usual spend. That is what we Mrs Ghosh: As you know there is a very well do and that is how we make our tally. structured set of procedures that all departments have to go through if they are considering compulsory redundancies coordinated by the Q135 Mr Drew: It would have been quite a credible Cabinet OYce. We have always said we will try to argument to have gone to Treasury and the EU to achieve our reductions in head count through say, “Look at the run of bad luck we have had and voluntary means if possible. We have had to, as you we have obviously had to spend more on know—and this related back to the Wildlife Unit in administration because we are running around 24 the West Country—have some structural hours a day, seven days a week trying to deal with compulsory redundancies which, in the event, many these crises”. However, it is not as credible if you say of the staV actually took voluntary redundancy you would have overspent this money regardless of terms. It may be that we would go through all the those crises. procedures necessary and required under the Mrs Ghosh: We have to live within the Treasury rules Cabinet OYce agreements. We would not rule out— and the Treasury rules are that, as it were, the people as no department would rule out—the possibility of and what you traditionally call the running costs of having compulsory redundancies in that structural core Defra are administrative spend and the circumstance. The response to our current scheme administration costs of the animal health agencies— has been very positive and as far as possible we and indeed of all our agencies, the RBA, the Marine would seek to avoid that. Fisheries Agency—are programme spend so we could not blur the distinction between the two even if we wanted to. Q132 Mr Gray: Can I just be absolutely clear that the savings that you have allocated as part of the attempt to get back to budget, the over-run: is that Q136 Patrick Hall: As I understand it the £63 at least partly due to the crises that the department million of overspend due to events outside the has faced? You have had an extraordinary run of department’s control—I am going to include foot bad luck with the foot and mouth, the flooding, the and mouth in that—the £50 million of projected bluetongue, the continuation of various other overspend is due to ordinary day to day diseases that are subject to our own investigations at management systems of Defra, despite bringing in the moment. How much of that £50 million mitigating improvements at the beginning of the overspend roughly is that? year. Processed: 11-07-2008 00:21:03 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 100 Environment, Food and Rural Affairs Committee: Evidence

21 November 2007 Mrs Helen Ghosh

Mrs Ghosh: Some of the impacts of those mitigating Mrs Ghosh: Yes and the mitigating actions we have actions may not yet have come through. For already taken are pulling the admin overspend example things like the sale of the Guildford site may down. We will carry on taking them to the end of the not have come through. year and then we will give ourselves a better place to be for moving into the CSR period. Q137 Patrick Hall: The £63 million includes the money from the admin costs of those outbreaks of Q146 Lynne Jones: So at the beginning of the year events. you felt that this was a reasonable thing for you to Mrs Ghosh: That is quite separate because those are have to do in this year. in a programme spend. Mrs Ghosh: We thought it was a challenging thing to do this year which is why we took early action on things like the reduction in head count numbers. Q138 Patrick Hall: So the £50 million projected arises from the ordinary day to day management Q147 Lynne Jones: That would not aVect the of Defra? eYciency of your department. Mrs Ghosh: It arises from the fact that over the Mrs Ghosh: That would not aVect the eYciency of period of the SR04 administrative programme— the department. again we explored this in some detail in the summer so in that sense it is not new news—because so many Coming back to the £65 million Y Q148 Chairman: of those are fixed costs it is in fact di cult to slow which is not in the admin section, how are you going them down to the third year of SR04 where to deal with that? V e ectively £60 million was instantaneously in the Mrs Ghosh: As I say, what we are doing at the third year taken out of our budget. We did not have moment is making accurate assessments of that and a flat line in admin spend for the SR04 period; it fell in the normal way—you will know this from your V o fast in the last year. Treasury experience—we will be discussing it with Treasury colleagues. We will be looking for Q139 Patrick Hall: So the overall budget for admin opportunities, if there are any, and we are of course was £286 million in this financial year? monitoring programme spend across the whole Mrs Ghosh: Yes. range of our programme budget. It may be that, by the end of the year, there are oVsetting savings elsewhere that emerge. Q140 Patrick Hall: What was it last year? Mrs Ghosh: Approximately. It was approximately Q149 Chairman: Would I be right in general terms £60 million more than that in the previous year. that if you cannot, after your discussions with the Treasury and adjusting the expenditure profile of the Q141 Patrick Hall: So there has been this quite steep programmes you have in the department, then you reduction. might yet be faced with having to make some more Mrs Ghosh: Exactly. painful in-year adjustments. Mrs Ghosh: As I say, the first thing is to make sure that if we look at our existing programmes—our Y Q142 Patrick Hall: Which has been di cult to other programmes which we are monitoring cope with. extremely carefully—we make sure that if such Mrs Ghosh: Yes, given the extent of fixed costs in the reductions in spend or slower spend than people are organisation, to adjust that fast. So we are adjusting anticipating arise we will be able to oVset this as fast as we can. The line for administrative spend potential overspend against underspends elsewhere. V in the CSR period starts o with the baseline we have We are not proposing—I am happy to say this—to for this year and then we will be looking to find the make any budget cuts to our programmes elsewhere five per cent, five per cent, five per cent admin to oVset this, to answer a question you asked at the reductions over the CSR period. beginning.

Q143 Lynne Jones: So when you started the financial Q150 Dr Strang: The scale of that £32 million for year with an admin budget of £269 million you knew FMD and £35 million for flooding, the Treasury that if you did not take action then you were going should recognise that that is a role for their to be how much over budget? contingency fund as opposed to having to find it out Mrs Ghosh: If everybody just carried on as they were of your departmental budget. What would be your carrying on before— reaction to that? Mrs Ghosh: That is obviously for the Treasury to judge and what we are doing is keeping a good tally Q144 Lynne Jones: You said half way through the on what we are spending and we will be having those year you were £50 million. There is nothing new in discussions with them. They obviously have other what you said. calls on the contingency fund. Mrs Ghosh: There is nothing new in what I said. Q151 Chairman: As we now have a flavour of the Q145 Lynne Jones: You knew at the start of the year challenges you are facing this year, let us move onto you would need to take mitigating action. the situation for the next three years. Processed: 11-07-2008 00:21:04 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 101

21 November 2007 Mrs Helen Ghosh

Mrs Ghosh: Indeed. opening remarks, to make sure we do have some kind of contingency reserve precisely to cover those Q152 Chairman: There was a denial process put in kinds of emergencies because that is the kind of place when the articles appeared in the press with the department we are. Again we have some perfectly usual line that you do not comment on leaked reasonable, in all our on-going discussions with our documents. That was the first line. Then the next line delivery bodies, suggestions from some of our was that no decisions have been taken. Let us come delivery bodies that actually for all sorts of demand down to the facts of the matter. You have been given side reasons they need a little more money. So what your allocation by the Treasury in public because I we are doing at the moment is saying that if those are am looking at it now. On page 246 of the the additional pressures, the new priorities that Comprehensive Spending Review it says that people have got—and the CSR process gives us the Defra’s expenditure in the next three years goes up chance to re-prioritise to some extent where we by plus £236 million, £306 million and £452 million spend our money looking at the overall picture— above your 2007/08 base line. We can cease our what does that mean in terms of how we re-allocate inquiry now if you say those are the right numbers, the rest of our spend? So some of the figures that those are the ones you are going to stick to and there were quoted in the press—I am more than happy to is no need to adjust them. state them again here—if for example you look at Mrs Ghosh: I think I can give a simple answer to some of that bundle of new priorities that I describe that. We will have to live—and we are doing our and compare it with the baseline we actually go into business planning process now and working closely the CSR period with, there is a gap and we have to with ministers to do so—within our CSR figures. think, among the rest of our programmes, if that is Yes, is therefore the answer to your question, a set of priorities, how we will reallocate funds there. Chairman. The figure that was quoted in the press of around £270 million is that, but it is not a cut overall because our overall budget is going up. Q153 Chairman: So those numbers are not going to change. Mrs Ghosh: That is what the chancellor has given us Q155 Chairman: That is why I asked you the in our CSR settlement and that is the envelope question. For the avoidance of doubt, the figures on within which we are doing our business planning. page 246— Mrs Ghosh: I do not have that in front of me. So you can look me in the eye and Q154 Chairman: I would have thought it would be say that in addition to having to live within the Q156 Chairman: imprinted in your memory by now. According to stated totals you have not made any demands page 246 the departmental expenditure limit for whatsoever on your directorate-generals and other 2008/09 roughly speaking is £2.7 billion and then it senior people in Defra to make any further goes to £3.8 billion and then it goes to just a fraction adjustments in their budget to bring expenditure over £3.9 billion. down. Mrs Ghosh: In the third year, yes; I entirely agree Mrs Ghosh: Can I state this from my point of view with that. and then perhaps we will meet in the middle. We have been given a CSR settlement. We have been given an uplift in our total budget in the CSR Q157 Chairman: I want to make certain we settlement; we have a 1.4 per cent real terms increase, understand this. You are talking on your territory we have £3.9 billion. We have had particular rises in and we are asking questions on ours, so I would like a number of areas that were highlighted in the to start from something which is common territory Comprehensive Spending Review so the additional which is page 246 of the CSR. capital on flood management, the environmental Mrs Ghosh: If what you are saying to me is whether transformation fund (another £570 million) and a we have magically managed or are we asking settlement on waste PFI. The overall budget for the somebody or is there some other pot of money which department is up. Our overall spend through the we think we are going to live within, the answer is no. CSR settlement will be higher than it is now. What we have to do, having taken that overall envelope— Q158 Chairman: So the overall amounts of money capital and revenue programme—is to look at the you have to spend remain as printed in the book. other demands there are on the budget and there are Mrs Ghosh: Absolutely. a number of new demands. There is, for example, the flood management resource—you cannot just have Q159 Chairman: So what has happened—if I have capital, you need some resource—and we understood you correctly and the Secretary of State announced with much support from RSPB and made it clear to us when he came before us—is that others that we would be increasing, as you know, the there are number of areas which, if you like, you rural development programme is going to double have ring-fenced and predetermined the expenditure over the next seven years and we had to do our share and when you net those oV you are left with a lower of match funding. Therefore we have a commitment sum of money which you have to allocate amongst of around £200 million a year to match that, that is all your other activities. already out there. The Prime Minister the other day Mrs Ghosh: You then have to re-prioritise some of announced £100 million over the CSR period on your other activities. You have—as I think the green homes. We need, as you were implying in your Secretary of State said when he came and talked to Processed: 11-07-2008 00:21:04 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 102 Environment, Food and Rural Affairs Committee: Evidence

21 November 2007 Mrs Helen Ghosh you—to think about how you do things, you have to of additional savings within your overall envelope think about how you join activities up together. You over and above the savings which you are committed have to think about people issues, so for example to as part of your comprehensive review. one of the things we have done this year and will Mrs Ghosh: No, that is a fundamental carry on doing is putting more people into priority misunderstanding. The five per cent saving we are areas. committed to finding is on our administration spend. What we have done, just to give you a particular example, is said to the department (to Q160 Chairman: Let me just be clear, you have already made it clear that you are committed now to directors in this case) “For the purposes of your a five per cent year on year reduction in your administrative spend, just assume that you will carry administrative budget; that is part of the CSR. on having the head count in year one which you have Mrs Ghosh: That is part of the settlement and we put at the beginning of the year; we will give you that over there in the admin box. appropriate learning and development and TNS and so on for all those things. We will hold the rest of the admin pot centrally and then we will decide where Q161 Chairman: That is part of the settlement. You we spend it. have also said to us that the amount of money that you have to prioritise has been reduced by these key Are you telling me that on the priority area expenditures. Is that right? Q165 Chairman: programme spend—because we do understand the Mrs Ghosh: You are putting it the negative way diVerence between them—you have not asked for round; I would put it the positive way round. £270 million of additional savings over and above Ministers identified a number of areas to which they any other savings? wish to give a higher priority. Mrs Ghosh: We have not asked for any other savings. This is why I think this five per cent is just a Q162 Chairman: Is it correct to balance the books confusion. We have a total CSR pot. What we need that you have advised your senior managers, your to do is to get to the end of the business planning directorate-generals, that in addition to the five per process and agree with ministers a budget that cent oV they are going to have to find some further balances. When you take the CSR pot which you savings of £270 million in addition to the savings have described we had some things which are that you have publicly promised as part of the already, as it were, taken out the pot (the kinds of Comprehensive Spending Review? initiatives that I described there, the idea of a Mrs Ghosh: The five per cent is about administrative departmental allocated provision so we have a spend; that is about head count, how we do our reserve in future years) and we need to say that if shared services. Put that to one side. those are givens we now to look at everything else we spend and decide how we distribute the rest of the Q163 Chairman: What was it that you gave as the CSR pot. presentation to ministers and your oYcials when you were trying to explain all this to them? You have Q166 Chairman: Why then did you e-mail round done that, have you not? within your department within the figure of £270 Mrs Ghosh: Of course we have, as any well-run million a request to eVectively break that down into government department would have done. All over diVerent types of cut, some of which was a £130 Whitehall now there is a business planning process million figure which you thought were less radical going on where people take the CSR settlement, they and a £140 million package which you thought were say, “Okay, this is the money we have, how do we more radical? Did you send that information out spend it?” Of course we are having those discussions to people? and we have had those discussions with ministers. Mrs Ghosh: Although I absolutely believe that one What we have done with ministers is identify those should not comment on leaks, yes I did. areas which have already been identified by them as Chairman: So you did make a request for a saving priorities; we have examined and looked at all of our that got up to a figure of £270 million because £130 spend in relation to our strategic outcomes and said plus £140 is £270 by my arithmetic. that if these are our strategic outcomes—as you know we have a new set of PSAs and departmental Q167 Mr Cox: What you are saying is that it is not strategic objectives—what are the best ways (this is, an overall figure. in a sense, our opportunity for a real root and branch Mrs Ghosh: It is not an overall figure. If you look at look at this) of achieving it? How far can we achieve the department’s budget as a whole it is simply some of our outcomes not through high spend but saying that if you have those things—any through influencing people? How can we work with householder budget is like this—to which you are other departments? How can we get better leverage? committed in a fixed pot you have to take the money We have had a very strategic look at all our spend. from somewhere else.

Q164 Chairman: I just want to stop you there Q168 Chairman: You described it in a message to because I want to get down to some numbers. You your department as savings. can tell us about the methodology, but let us get Mrs Ghosh: Savings compared with what people are down to the numbers. I said to you that it would spending now. It is a re-prioritisation. What we have seem that you have asked people to ﬁnd £270 million done—again this is what decent management boards Processed: 11-07-2008 00:21:04 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 103

21 November 2007 Mrs Helen Ghosh and decent organisations, public and private, would clearly linked to our strategy. There are some do—is to give some sorts of indications about what smaller programmes—that is why I specifically say, kinds of things, fitting in with the strategic analysis “Please look at some of these smaller we have done, they might like to think about. That programmes”—which are not worth enormous is what they are going through. money in many cases, they may well absorb (this goes back to the discussion we had earlier) Q169 Chairman: So put simply, if you are going to significant amounts of administrative time. We meet the things within the overall envelope you have should have a look at those and see if there are some promised to spend, there is going to be pain of those where we can get spend out. That is why we elsewhere. said, just as a target figure, let us see if we can get that Mrs Ghosh: There needs to be re-prioritisation. kind of amount out. People may come back and say, “Well actually we think we could get more out”; people might come back and say, “No, that is a very Q170 Chairman: That is a fancy way of saying “pain”. high political priority and excellent value for money Mrs Ghosh: No, I think it is an extremely important programme” so we will keep that in. What we are point. If you say it is all pain you are assuming that trying to do through this business planning process all the rest of the spend that we are currently is end up with a sustainable budget and we have to spending is perfectly aligned, is excellent value for look at all those sorts of options. money; there will be programmes, for example, that have a natural end in the coming year, in which case Q173 David Taylor: The way you describe it it seems the directors involved for developing the budget will to be a fairly leisurely process with not too much of be able to stop doing them. That is not necessarily a sense of urgency about it. There is not a hope in hell pain. I think it would be a very bizarre organisation of you saving £50 million on your admin costs. You that said, “Okay, we have a three year budget, let us have another five per cent cut in that budget on the just assume we roll everything forward”. We take the horizon. You are going to be facing the position that example—which I am very keen to take—of Natural those programmes that are not within the key four England funding and indeed, as you will have heard, priorities that Hilary Benn set out are going to we are (as we are with all our delivery bodies) in have cuts. dialogue with them about spend but if you look at Mrs Ghosh: Not necessarily. the Rural Development programme for England we are doubling that. The spend on bio-diversity Q174 David Taylor: Arithmetically it is inevitable. It through Natural England over the next seven years is not “not necessarily”; arithmetically it is is twice as much as over the previous seven years. If inevitable. You are in month nine of the present you look at the overall package that is going into financial year. some of these areas—Natural England would be an Mrs Ghosh: I think we are getting confused here. obvious one—actually the money is increasing. What I am describing is a process from 2008/09 Nonetheless we are having negotiations and onwards. We have discussed this year’s measures. discussions with them and with all of our delivery network and indeed our internal programmes to say, Q175 David Taylor: Can I just say that some of your “Okay, how could we achieve the outcomes we want smaller programmes are clearly having to plan their to achieve in diVerent kinds of ways, spending our budgets for 2008/09; they have had no certainty from money in diVerent kinds of ways?” This is just a re- you about continued funding. There seems to be no prioritisation exercise against a new strategy. That is sense of urgency. They are going to have to issue what the department and directors are currently precautionary redundancy notices before the end of doing. the calendar year (because some of the staV are entitled to three months redundancy) for want of a Q171 Chairman: Why is it that you want to take £30 sense of urgency, sense of priority, sense of clarity million out of your smaller programmes? from the main department. It is no wonder that the Mrs Ghosh: I will describe this to you. big ones like the Environment Agency, British Waterways and the medium ones like Natural Q172 Chairman: What are those programmes? England and the Commission for Rural Mrs Ghosh: They are a variety of things and we did Communities are all bracing themselves because an analysis as part of the discussion and again this is they do not feel that they are part of the core cutting-edge practice when it comes to how any priorities that the Secretary of State spelt out a week organisation works. We did an analysis of our high or two ago. What on earth is happening? Are you impact programmes and the fit with our strategic driving this process? Are you in charge of this outcomes. Again Hilary, when he came, described process? what he thought we should be focussing our money Mrs Ghosh: I am in charge. on: licence to operate areas, climate change, natural environment, working with partners. So if those are Q176 David Taylor: Are you not asleep at the wheel? the areas where we should be spending our money— Mrs Ghosh: I am certainly not asleep at the wheel. In they are the top, high impact, close on strategies— fact we have moved very swiftly on this process. As are there things when you actually look at the spend I say, we had done a very detailed analysis of our (and some of them may be hangovers over a number strategy; we have already started talking to most of of years) where there is less impact and it is less our delivery bodies and organisations about the Processed: 11-07-2008 00:21:04 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 104 Environment, Food and Rural Affairs Committee: Evidence

21 November 2007 Mrs Helen Ghosh kinds of options that we have in a very open way I to an end. It is probably better, rather than busk it, hasten to add. We have asked our directors to come to just think of some examples and let the back with their proposals on how they think they Committee have those. would like to spend their budgets on a very short timetable. All our delivery bodies, including the Q179 David Lepper: With an indication of the small ones, are well aware of this process. We have finances involved. had a number of open meetings with them and hope Mrs Ghosh: I am grateful that the Committee has to have concluded all our discussions by February, not sought to go more into the detail and well in advance. By comparison again, if you look at commitments and so on because, as I say, it is other government departments, that is a perfectly genuinely the case that the business planning process swift timetable. As you know we did not have the is going on and ministers have taken no decisions. I CSR settlement until October. This is not just a want to be sure that these are not areas where matter of slicing up a cake and handing it out, ministers might decide, when they have considered actually this is our opportunity to make sure we can other bits of evidence, that they would continue the deliver the PSA outcomes we have been given. It has programme or whatever it may be. I will try to find been a sophisticated process; it has been an open some rock solid examples of the kinds you describe. process with our delivery bodies. If there are any The interesting but quite challenging thing about particular issues of the kind you describe in terms of Defra’s spend is that 75 per cent of our spend goes particular concerns about funding or the kinds of out through 25 programmes so most of our spend is thing you describe which I know is a particular issue the big stuV. When you get down to what we would for voluntary bodies, my teams will be in discussion describe as a smaller programme it could be a million to make sure that people are getting an early enough or so up to—again I will let the Committee have the indication of the kinds of figures that might emerge figures as to precisely how we define it—tens of to avoid that sort of situation. There has been no millions. delay in this process whatsoever. Q180 David Lepper: Can you give an indication of Q177 David Taylor: It is far too late; you will be a what kinds might be considered as to the month from the end of the financial year. The small programmes. bodies in particular are experiencing the departure Mrs Ghosh: If the clerk to the Committee could have of core staV because they do not want to be caught a look at our annual report; that would reveal what up in a process which they sense is inevitable and is things go into the small programmes. Then there are just around the corner. some small programmes which clearly do have a Mrs Ghosh: As I say, if there are particular issues priority. about smaller organisations then I can assure you my teams, for example on the rural side, will be Q181 David Lepper: David Taylor just gave one discussing those with the bodies concerned. We are example, I think. already in discussion with all our delivery bodies Mrs Ghosh: Yes, the Rural Community Councils about likely outcomes and asking them to exemplify would be an example. Clearly that is precisely the various options, so they are completely engaged in kind of issue where ministers would want to take a this process; it is not suddenly going to be revealed view on an appropriate level of spending and how it in February, it is part of an on-going process to fitted with strategic outcomes. make sure we end up with this balanced budget that targets our strategic outcomes. Q182 Mr Drew: As you are aware this Committee did a detailed analysis of the end of year cuts and the Q178 David Lepper: You told us that in the course impact on BW. That idea that we are going back of the next three years there are likely to be some again to ask BW to make further cuts is just unreal. programmes currently running which are going to It has caused huge upset and consternation; it has come to an end. Could you just give us an example completely changed the nature of what the or two of what those programmes might be and the Government has been doing with waterways, but kinds of money involved? Could you also give us an just park that and let us take the issue of the Rural example, because I do not have it clear in my head, Community Councils. When I was left with the of what, in terms of this exercise, would be situation in my own constituency where eVectively considered to be a smaller programme which you because there was a budgetary problem prior to the might have to look at to see whether or not its life has setting up of Natural England, and Natural England come to an end? had certain nature reserves which they were unable Mrs Ghosh: I am trying to think of a good example. to fund, the Rural Community Council in It may be that I just volunteer to give you some Gloucestershire subsidised Natural England. We are examples. As you know, what we are trying to do in talking about the impact on some of these small the department is to move to a much more project voluntary bodies. That has a huge ramification in based system so that you will have projects to rural areas; these are voluntary bodies that rely on achieve. An example—although most of that spend clear funding streams and actually cost, in terms of would be admin spend actually—would be things value for money, next to nothing because the like seeing through the process of implementation of alternative is that these schemes cannot be delivered. the Animal Welfare Bill or those sorts of things. We If you go and look at those schemes and headline will have some things that will happen and will come those schemes it is unfair, unrealistic and, I have to Processed: 11-07-2008 00:21:04 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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21 November 2007 Mrs Helen Ghosh say, in terms of the reputation of Defra in the Q189 Chairman: I think we have got the message of countryside, will be absolutely and utterly the sum total of the pain financially, that people who disastrous. are not in the priority areas are going to have to Mrs Ghosh: That is exactly the kind of consideration suVer as you come to live within the overall envelope that ministers will want to take into account in of your departmental expenditure limit is £270 reaching final decisions. million. Mrs Ghosh: As you know and I will say this again, you describe it as pain but that is negative; it is re- Q183 Mr Drew: Why are you looking at it in the first place? prioritising against a new set of priorities and an Mrs Ghosh: As part of this exercise we have to overall increase. look—as any good organisation would—at Chairman: That is a very fancy term. everything we spend money on. We may well look at an item of spend and say that that is obviously highly Q190 Mr Cox: It is painful for those who receive a strategically focussed, excellent value for money and cut. gets a tick, but we do need to go through the process, Mrs Ghosh: Of course it is. One of the great strengths not least because I want to appear in front of this of Defra is that we have wonderfully active NGOs Committee at the end of this financial year and say and public interest in what we do. Nobody wants to that we have a sustainable budget focussed on our see the thing they do with less money spent on it. strategic outcomes, PSAs, DSOs, through the CSR07 period, therefore we have to do an exercise that looks like this to say how we allocate our spend Q191 Mr Cox: Did you warn ministers when they to achieve those objectives. redefined their priorities that there would be some existing and very worthy programmes that would be likely to feel the pain with the cuts? Q184 Chairman: When you came before us in the Mrs Ghosh: Absolutely. As I recall, when Hilary summer you made it very clear that your planning Benn came and talked to you he said that we have an assumption was level cash. excellent outcome in a number of areas, we have Mrs Ghosh: Indeed. some new priorities, this will mean tough choices. He said this to you when he came to speak to you and Q185 Chairman: That obviously means that in real that is the process that we are working closely with terms Defra was going to go down over a three him on. year period. Chairman: I think we now have the order of Mrs Ghosh: Indeed. magnitude. I want to move from the overall programme field and you are quite right that it would be unfair of us to probe too far in terms of the Then everybody got terribly excited Q186 Chairman: detail when obviously you have presented your when the actual figure that came out was not level thoughts to ministers and the ministers have to make cash, it was plus 1.4 per cent. their minds up. However, I think you have not Mrs Ghosh: Yes. denied the fact that there could be a radical options package as part of the £270 million which equals Q187 Lynne Jones: Is that in real terms? £240 million. Let us move to the admin side. Mrs Ghosh: Yes, that is in real terms; that is a real Lynne Jones: Before we move on I have some terms increase. questions I would like to ask. Chairman: I do apologise. We will defer my admin Q188 Chairman: So you have suddenly gone from foray for a moment. level cash, so a real terms decrease, to a 1.4 per cent real terms increase. Q192 Lynne Jones: In terms of the new priorities Mrs Ghosh: If you look at the programme as a over and above those which were mentioned in the whole. You would take out the additional funding CSR, are these priorities that have come from within that you have been given which, as you know, was Defra and within your own ministers? Are they your given for very specific things—some of them capital, priorities or have then been imposed by others? although that is irrelevant—and you would just say Mrs Ghosh: No, they are our priorities. to everybody else, “Okay guys, we will just carry on doing exactly what we are doing at the moment”. Along come other things that people want to do. We Q193 Lynne Jones: You mentioned the have a new settlement and they say, “Right, what are announcement of the Prime Minister on the £100 our political priorities for the next three years?” and million for greener homes; could you tell us what they have some new ones. Those are the things I that is because the Low Carbon Building described—the green homes that the Prime Minister programme comes under BERR? announced, putting more money into the RDPE— Mrs Ghosh: This is an advice package. Again I am and all those things mean that in a flat cash budget very happy to give the Committee more information for the rest of the department some things have to be on this. It is essentially a service that will be provided looked at. If we are doing our job responsibly we through the Energy Savings Trust; it is an Energy need to look at everything and decide then what is Savings Trust activity, it is not the Low Carbon going to happen. Homes initiative that DCLG are responsible for. Processed: 11-07-2008 00:21:04 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 106 Environment, Food and Rural Affairs Committee: Evidence

21 November 2007 Mrs Helen Ghosh

Q194 Lynne Jones: So this is a sort of green doctor asked what is Defra for, what do we do, are we sure type thing? that the things we are doing and our activities are Mrs Ghosh: Yes, and, as the Prime Minister actually focussed on the things there are to do? described, providing a service to people so that it is easier to green their homes in a targeted kind of way. Q200 Chairman: He has found out very quickly, has he not, what it does? Q195 Lynne Jones: This is revenue for the advice? Mrs Ghosh: That was David Miliband. Hilary Benn Mrs Ghosh: Yes, this is the advice element of that. has found out very swiftly what it does. That dialogue—where do we spend our money and what Q196 Lynne Jones: There is no point in giving people are the eVective things to spend out money on?— advice if they cannot actually aVord to implement produced the two high level PSAs. the advice so how does that work? Mrs Ghosh: This is definitely an advice service. Clearly there are other schemes that are in existence: Q201 Mr Cox: When was that? the Carbon Emissions Reduction Target Mrs Ghosh: The PSAs of course were announced at administered through the suppliers; Warm Front is the time of the CSR settlement in October. We were another that targets, as it were, capital help (I am very clear about the underlying objectives of the using that work loosely) on, for example, putting in department in terms of the strategy set through the central heating, putting in lagging and so on. There Strategy Refresh by close 2006. is obviously an element of the advice system which is to say that this will save money and obviously have Q202 Mr Cox: When were you given these four core a greener impact. I think the £100 million is priorities? essentially the advice service but I am very happy to Mrs Ghosh: These were essentially set through the let you have details of that. Strategy Refresh process. We always knew that licence to operate—as you say Hilary Benn has Q197 Lynne Jones: One of the problems with the certainly had occasion to learn that—is the bedrock Low Carbon Building programme is that it is now of what we do. We knew that climate change and likely to be underspent because of the low portion of natural environment were our other two priorities. grant that is now available so people might well be advised, for example, to put in solar, thermal or other initiatives and yet the grants are too low. Is this Q203 Mr Cox: Why are we in a situation where the something that is being looked at, that the grants small programmes that David Taylor asked you may not be there at a suYcient level to enable people about are only having decisions—or not yet having to act on the advice? decisions but likely to have decisions—taken about Mrs Ghosh: I think this goes back to the point I made them by February? Why is it not possible for the to the Chairman earlier, what we need to do as part definition of these priorities and the re-organisation of this process is make sure that what we are doing of the budget to take account of them to take place joins up very eVectively with what DCLG are doing earlier than the eleventh hour? and what BERR are doing because in a lot of these Mrs Ghosh: Because we did not actually have our areas there is potential synergy and indeed potential spending settlement for the CSR07 period until overlap. That is one of the things we are doing and October. The CSR07 period took a very long time. Hilary, I think, made that point when he came to see you about making sure we get the leverage right Q204 Mr Cox: But you would have known that it across all government programmes. That is the kind was not going to be a generous one. In fact you got of thing we are looking at. a more generous one than you expected. Mrs Ghosh: Clearly we have been doing thinking as Q198 Lynne Jones: So that is work in progress. we do all the time about how our spend equates to Mrs Ghosh: Yes. our strategic priorities. Any decent department would be doing that; wherever you are in the Q199 Mr Cox: One thing that has occurred to me is spending review cycle you would be doing that. that the problem seems to go back to this question of the redefinition of priorities by ministers. I have When did you first find out that you two questions really. The first is: when did you Q205 Mr Cox: were going to have to spend £100 million on greener become aware of the priorities that ministers are homes or the advice service? now laying down to you? The way you speak it Mrs Ghosh: We had been having long term would almost be as if one or two of them have discussions with the Energy Savings Trust about parachuted from a very high distance and have not their proposals and plans for the future in our on- been long in gestation. When do you first become going dialogue. The idea of the greener homes aware of them? process was one that we have been discussing with Mrs Ghosh: If we consider the set of priorities that the Energy Savings Trust for some time. we are trying to deliver through the CSR07 process the origin of this lies in an exercise that we did in fact under David Miliband’s leadership in the first Q206 Mr Cox: When did you first find out about the instance but very much embraced by Hilary called £100 million to fund an advisory service for Strategy Refresh. David Miliband came in and greener homes? Processed: 11-07-2008 00:21:04 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

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21 November 2007 Mrs Helen Ghosh

Mrs Ghosh: It was the subject in the normal way of have asked them to exemplify at diVerent levels, discussion between ministers and Number 10. As I focussing the admin reductions mainly on the say, we had already been talking to the Energy corporate centre and corporate services activities. Savings Trust. Q214 Chairman: In terms of the exemplification that V Q207 Mr Cox: My question was when did you find in simple terms means di erent examples of fewer out? Can you tell me? people being employed by Defra. Mrs Ghosh: That the Prime Minister wished to Mrs Ghosh: As I said, since we have to reduce our announce that this week was part of the on-going admin spend five per cent, five per cent, five per cent debate over a number of weeks with Number 10 in over the period—this is core Defra—I expect Defra the light of the fact that we have been having to be smaller by the end of the CSR07 period than it discussions with the Energy Savings Trust. is now and indeed for a department like ours which is a policy deliverer, an influencer, you would expect it gradually to move to a diVerent sort of shape than Q208 Mr Cox: Is the answer to my question “quite it is now. Yes, I would expect the department to be recently”? smaller. Mrs Ghosh: A matter of weeks. Q215 Chairman: In your judgment when is this Q209 Chairman: You did not say that in your reply process going to be completed? When will we have to our report, did you? some flesh on the bones so that we can invite you Mrs Ghosh: It is something that we have been back to explain in more detail which programmes discussing with the Energy Savings Trust. are going to be aVected and how the administrative savings are going to be achieved? Mrs Ghosh: As I say, we have to have finalised Q210 Mr Cox: The answer is that you did not know you were going to have to spend £100 million on budgets for all the reasons that members of the greener homes until the last couple of weeks. Is Committee have described by February and so I that right? would be very happy to come back in late February/ March to have the discussion. Mrs Ghosh: We knew that it was one of the things the Energy Savings Trust wanted to do and indeed Q216 Sir Peter Soulsby: Following from that, one of therefore, when we were thinking about the package the criticisms of Defra has been the lack of certainty on climate change going forward it was a thing in its funding for agencies and bodies and so on. which again fitted in very well with work other Y Mrs Ghosh: Yes, which is what this process will departments are doing on energy e ciency and zero hopefully reduce. carbon homes. It was an obvious part of that package. Q217 Sir Peter Soulsby: When you come to the conclusion of this, how much certainty are you going Q211 Mr Cox: A hundred million? to be able to give about the future years? Mrs Ghosh: Over the three year period. Mrs Ghosh: Yes, we will give as much certainty as we can for future years. We will give clear planning Q212 Chairman: I want to just move towards a assumptions for future years but three years is a long conclusion, but am I right in saying that your time in politics. If we take, for example, the Rural Management Board on the admin budget has asked Payments Agency, the amount of money that we are all policy groups to deliver a three per cent reduction putting into the Rural Payments Agency will be planned considerably to go down by year three in their pay budgets? Y Mrs Ghosh: We have asked them to show us—again because of the improvements and e ciencies they this is absolutely normal business planning practice have made. That will be a lower level of spend by year three. We can predict now what we think our in any organisation or any department that I have spend pressures will be like in year three but there been in—to say show us what that would look like. will be other things that have arisen so we will give Clearly by the end of the CSR07 period we need to as far as possible indicative allocations that people have achieved our five per cent, five per cent, five per can plan on, the trend of spend to everybody. cent reductions. However, we will have to allow some flex for the unexpected or for new priorities from government. Q213 Chairman: Is that part of the five per cent Sir Peter Soulsby: That is something we can explore reduction? at that time. Mrs Ghosh: It is part of the five per cent reduction Chairman: Can I thank you very much indeed for and what we are trying to do—and this is back to the coming at short notice and for giving us so importance of people in an organisation like ours— generously your time. It has been an interesting is to ask the policy and delivery groups to exemplify voyage of exploration. There were one or two things (I hate using that term because it is technological) a which you indicated that you would clarify in lesser reduction in their administrative costs than we writing. We, as always, will be grateful to have that are at the corporate centre because clearly that is an information. We look forward to you coming to see area where we can reduce and increase eYciency us again once these deliberations are concluded. without damaging the delivery of our outcomes. We Thank you very much. Processed: 11-07-2008 00:21:04 Page Layout: COENEW [E] PPSysB Job: 383077 Unit: PAG1

Ev 108 Environment, Food and Rural Affairs Committee: Evidence

Memorandum submitted by the Department for Environment, Food and Rural AVairs (Defra Priorities 02)

Written Answers to Committee Questions

Q120/121—are these (the properties targeted for disposal) long leasehold or freehold properties? Which is Guildford? The Department expects to dispose of approximately 103 properties between now and the end of the CSR period in 2010–11. Of these, 29 are short leasehold, and 74 are freehold. No long leasehold properties are currently expected to become surplus. Guildford is a freehold site.

Q122—how will the Department assure itself that the disposal of Guildford will be at best value and best time relative to the property market? Defra’s Estates Strategy has twin objectives of improving value for money and the sustainability through the disposal of surplus property, increasing space utilisation rates and investment in improving the energy and water eYciency of our buildings. In the current Spending Review since April 2004, period Defra has: — secured £25.25 million in disposal receipts; — saved £9.3 million in running costs; and — reduced the size of its estate by 16% from 382,250 sqm to 320,750 sqm. Disposals and investment decisions are supported by business cases. Signiﬁcant disposals or investments are subject to approval by the Management Board. This procedure was followed for the Guildford site for which the business case was approved on 16 November 2006. Until a negotiated sale is completed, it would not make commercial sense to put the details of the business case into the public domain.

Q126/127—can Capital receipts be oVset against the Administration Budget? Receipts from the sale of capital assets cannot be oVset against the Administration Budget or the Programme Budget. Capital receipts that are properly approved by HM Treasury (such as via the Comprehensive Spending Review) can be used to support additional capital expenditure only. If HM Treasury do not approve the recycling of the receipts, they would be transferred directly to the Consolidated Fund.

Q178/179—“Sun-setting” Programmes Examples of programmes that are coming to a natural end include the Agriculture Development Scheme (2007–08 budget: £3.4 million). Ministers announced in May 2007 that the scheme would be closed to new applicants as it was always intended to be a temporary arrangement. Expenditure will therefore tail oV to £500k by 2010–11. The Regional Food Scheme (2007–08 budget: £1 million) provides support for quality regional food and is in its ﬁnal year of operation. There are also a large number of Defra programmes that undergo periodic review as part of policy development and routine assessment of their eYciency and eVectiveness. This may often result in a change of direction for the programme and an opportunity to examine the planned spending proﬁle.

Q193—Green Homes The new Green Homes Service will be a one-stop contact point provided by the Energy Saving Trust. Over the next 12 months the Trust will roll out a nationwide network of regional centres, oVering consumers a range of free and impartial advice and independent services. This will include testing a new approach, starting with a face to face household and lifestyle audit and personalised action plan, through to project management of the actual installation of energy eYciency and renewables technologies, and a range of ﬁnancial support options.

Background Every household in the UK creates about 6 tonnes of carbon dioxide every year. Around 40% of emissions are the result of decisions taken directly by consumers (ie including transport). Evidence shows that 20 million adults have little understanding of energy costs or usage but 50% are willing to change their habits. The challenge is that there are signiﬁcant barriers to action (apathy, poor information, high upfront costs) and consumers need help in being hand held through a process to cut their emissions. Processed: 11-07-2008 00:21:04 Page Layout: COENEW [O] PPSysB Job: 383077 Unit: PAG1

Environment, Food and Rural Affairs Committee: Evidence Ev 109

Millions of pounds worth of support from Government initiatives is directed at householders, including the Carbon Emissions Reduction Target, Warm Front, the Low Carbon Buildings Programme and the Community Energy EYciency Fund. The new Green Homes service will eVectively draw on all of this. The Green Homes Service will include the roll out of the EST’s Sustainable Energy Network of regional centres which will provide advice not only on energy eYciency but also on microgeneration, water eYciency, recycling and greener travel, and provide easy access to an energy audit and facilitate access to the full range of discounted and free oVers available. Low income and vulnerable customers will continue to get particular help. The service will be backed by: — energy performance certificates, which will be rolled out to all households from 14 December; — as well as increased levels of activity by energy suppliers under the forthcoming Carbon Emissions Reduction Target. As part of the Green Homes Service, the Energy Saving Trust will be piloting a new approach, starting with a face to face household and lifestyle audit and personalised action plan, through to project management of the actual installation of energy eYciency and renewables technologies, and a range of financial support options. The Green Homes Service will be provided by the EST who enables millions of people every year to take energy saving actions via its free advice service which has been established for some 15 years. Since EST was established, it has funded, or influenced the installation of, sustainable energy saving measures which, over their lifetime, will lead to savings of around 20 million tonnes of carbon (nearly 75 mill tonnes of CO2). They are independent and trusted experts. Department for Environment, Food and Rural AVairs December 2007 Processed: 11-07-2008 00:22:23 Page Layout: COENEW [SE] PPSysB Job: 379090 Unit: PAG2

Ev 110 Environment, Food and Rural Affairs Committee: Evidence

Environment, Food and Rural Affairs Committee

Wednesday 30 April 2008

Members present

Mr Michael Jack, in the Chair

Mr James Gray Sir Peter Soulsby Lynne Jones Dr Gavin Strang David Lepper David Taylor Miss Anne McIntosh Paddy Tipping Dan Rogerson

Witnesses: Ms Helen Ghosh, Permanent Secretary of State, Mr Bill Stow, Director General for Strategy and Evidence Group, and Mr Stephen Park, interim Director of General Finance, gave evidence.

Chairman: Good afternoon, ladies and gentlemen. regard dealing with the damaging eVects of climate Welcome to this evidence session with the change, since it is one of our two top level priorities, Permanent Secretary of Defra on Defra’s as the first priority, but we are doing work now, as departmental priorities. Can I formally welcome you know, led by the Prime Minister and working Helen Ghosh, the Permanent Secretary of Defra, closely with DFID, both on food security issues Bill Stow, who is described as the Director General internationally and increasingly thinking about for Strategy and Evidence Group—I like the idea of world economy and demand impacts on domestic evidence, so we will be looking for lots of that from food supply. So we are working on food security you, Mr Stow, this afternoon—and Mr Stephen issues, but we feel that the context for a lot of this Park, the interim Director General of Finance for debate is actually in climate change. Defra. I am going to ask Anne McIntosh if she would start our questioning. Q220 Chairman: Can I interject and ask you a question. When, in December 2005, the Vision Q218 Miss McIntosh: Can I start by drawing Document came out and we published a report on it attention to my declaration on the Register of and other commentators mentioned the lack of any Members’ interests? Can I ask how you would reference in that document to food security, your describe your chief priorities for the forthcoming department, along with the rest of government, was year? dismissive that this was not really an issue. That was Ms Ghosh: What we have done in framing our plans only about two and a quarter years ago. Why were for the CSR/07 period is very much to go back to our you so dismissive of it as an issue then and so overall strategy and, in particular, our two Public enthusiastic about doing something about it now? Service Agreements which were announced in Ms Ghosh: I think people use the term “food October around climate change and the natural security” in a variety of diVerent ways. Sometimes it environment and also, of course, given the range of is used to mean self-suYciency—should the United responsibilities that Defra has, to ensure that we are Kingdom be self-suYcient in certain kinds of food— protecting appropriately what we call our licence to and this Government has consistently taken the view operate areas: for example, ensuring that we have that in a free market world, given the trade flows that enough funding, particularly in our Executive we have, the issue is not how much do we produce Agencies, to respond to emergencies, whether it is domestically but is there a ready supply of food animal disease or on the flooding side in terms of available through the normal trading routes that we flood response through the Environment Agency. So normally use? I think it is completely true to say that that is what drove our strategic priorities in terms of the issue of food security in, if I may call it, the new framing our budgets for the coming year. sense, the increased demand particularly from the developing economies for wheat, for meat, diVerences in consumer patterns in this country and For our own clarification, the Q219 Miss McIntosh: elsewhere, has made the issue of food supplies outgoing Chief Scientist said that climate change internationally extremely important, and I think was the greatest threat this country faced; the that is why both the Prime Minister and Hilary Benn incoming Chief Scientist said that food security was are very interested in this broad issue, and that is the greatest threat. Do you have a view as to which how the incoming Chief Scientist has framed the is the greatest threat? debate: not self-suYciency, but how can we ensure Ms Ghosh: Of course the two things, as John both in this country there is good food available at a Beddington and, indeed, Bob Watson, the Chief reasonable cost and internationally. In fact, I have to Scientific Adviser for Defra, has made clear, are say, policy develops, strategies move on, events very, very closely related. If you look at change. That is how we are framing the debate. international food security issues and the likely impacts of climate change, particularly in some developing countries, the impact of climate change is Q221 Chairman: Beautifully taken from the “line to likely to have a very significant eVect, and so we take” document about these things. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 111

30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park

Ms Ghosh: Not at all. climate change through places like the Hadley Centre, so that is our number one approach. We are Q222 Chairman: I think it is, because the putting significantly more money on the domestic commentators at the time in 2006, when comment side into the Act on CO2 Campaign, because clearly was passed on the Vision Document, did actually behaviour change domestically is the way that we make the distinction between self-suYciency and achieve the kind of system behaviour change that we security of supply. The obvious drivers of demand, need. We are continuing to finance organisations the developing nations were known about and yet such as the Carbon Trust and Energy Savings Trust, there was, eVectively, a dismissal of this as an issue, who have had significant increases in recent years. and I am interested to know what are the factors that The Energy Savings Trust, for example, we are have suddenly alerted the centre of government to getting now to focus on the Green Homes Scheme. something which other experts were flagging up So we are putting a lot of money into climate change, when that Vision Document was first produced? but the fundamental thing we need to do as a What has changed? department and as a government is influence Ms Ghosh: I take it, by the way, you are talking internationally and make sure that the policies that about the CAP Vision Document. we have across the UK Government fit with achieving our overall climate change objectives. Of Q223 Chairman: I am indeed. Unless you have course things like the Climate Change Bill currently produced any other ones that we were not aware of. going through would be another key tool. So it is not Ms Ghosh: No. Of course, we have always been so much money, it is how we focus people, conscious—the “F” in our name stands for food— arguments and campaigning. of the issues around international food supply. We believe that the approach that we set out in the CAP Vision Document, and which we will be carrying Q225 Miss McIntosh: I will think about that one. forward into the health check and into the debates Why is the department forecasting an overspend of over the coming five years or so over CAP post 2012, £155 million for the period 2007–08? all argue in the direction of anti-protectionism and, Ms Ghosh: I am happy to say, as indeed I suggested as far as possible, free and open trade, and that is the when I came in front of the committee last autumn, approach that we are taking in the international I think it was, that we are not forecasting an debates about trade. We have consistently, through overspend. That was very much a mid-year position. the period both from the Vision Document through As a result of the financial controls and some of the the proposals we are putting together now on CAP reprioritisation we put in place, we are optimistic health check, had those issues in mind. I do not think that we are going to come in with a balanced budget any commentators in autumn/winter 2005 would in 2007–08. That has been helped by the fact that, for have been able to predict—and I think it is example, we have over achieved on our head-count instability—the fluctuations in the cost of certain reduction target. We had a head-count reduction staple goods that we have seen recently, and what we target of about 1,400. We have achieved about 1,600 are doing is monitoring both inputs and outputs, the thanks to eYciencies as a result of improvements in inputs into agriculture in terms of fertilizers, and so on, and the outcomes in terms of wheat prices and, the Rural Payments Agency, so we are not therefore, the prices on animal feed, and what we are forecasting an overspend. doing, which is what a flexible and responsible department should do, is responding to that by working closely with other departments and with Q226 Miss McIntosh: So the figures you published international institutions. alongside the 2008–09 main estimate report showing an outturn of 3.973 billion is not valid? In the Spring Supplementary Budget published in February this Now that we have established Q224 Miss McIntosh: year, the department reported a total budget spend they are your priorities, should you not be seeking to of 3.818 billion for 2007–08. Then, publishing your increase the budget rather than decrease the budget Supplementary Budgetary Information in April, it for climate change and food security? Ms Ghosh: As I discussed in this committee before, showed an estimated outturn of 3.973 billion. there are a variety of ways in which the UK is going Ms Ghosh: I suspect, and this is a discussion that I to achieve its climate change objectives. A have had with the Chairman and others, that what comparatively small lever is how much we spend, you are talking about there is Estimates, which is V although we are actually, in financial terms, very di erent from our Departmental Expenditure maintaining our spending on climate change areas Limit Budget. The Estimate is a question of the call but, I think probably even more importantly, we make on Parliament for cash, which in our case, putting more and more of our staV resource and, as for example, as we have discussed, is a gross figure it were, intellectual resource into the issue. In terms, rather than a net figure. What I am describing is the for example, of international negotiations and what Departmental Expenditure Limit, the budgets on we can achieve in the next phase of Kyoto, that is which we operate within the department and which about people. It is about people, it is about was the subject of the hearing we had last year and influencing, in terms of using the best evidence that the subject of some media speculation. In terms of we have got, and we already have a wonderful our Departmental Expenditure Limit Budget, we are evidence-base, that we are always building on, on optimistic that we will come in on balance. 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Ev 112 Environment, Food and Rural Affairs Committee: Evidence

30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park

Q227 Mr Gray: I probably completely Ms Ghosh: No, they have not. misunderstood you, and I am no accountant, but did I understand you to say that the estimate which was put to Parliament, which is part of the negotiating Q235 Miss McIntosh: ---then you are confident that procedure which enables you to get the money which the cash flow has succeeded, but this is a mythical you need to run the department, you are quite figure? content that that figure should have been 125 billion, Ms Ghosh: The Estimates are a mixture, and this is or whatever it was, higher than you are confidently where I think our tutorial with the Chairman and expecting that you will actually use? Is that what I some other members was useful. They are a mixture understood you to say? Where does this figure 3.973 of, as it were, the budget that we have to spend— billion come from? What is that figure? whether it is to give money to Natural England, to Ms Ghosh: I think I will ask my finance director to give money to Natural England for their non report. European activities, to give to Carbon Trust, to give to the Environment Agency, to run ourselves—it is a mixture of those things which have to be within our Do, but your main estimate says Q228 Mr Gray: Estimates, it is money we spend, and then other your estimated outturn is 3.973 billion, and Anne’s things which are not within our budget, of which the question was why is that diVerent? biggest item for Defra is the gross amount of money Ms Ghosh: From my description. we pay out on behalf of Europe and then, as it were, later on we get the money back, that is what creates Q229 Mr Gray: Unless I misunderstood you a disconnection between the Parliamentary Estimate completely, and I remember going through these and what we spend. very discussions when I worked in the department, you said, “Because that is the figure we use for parliamentary estimates”? Q236 Chairman: Mr Park is going to enlighten us. Ms Ghosh: Yes. Mr Park: I will certainly try, Chairman. I think the confusion is the use of the word “estimate”, Estimate Q230 Mr Gray: In other words, that is the figure you as in parliamentary terms, whereas as I think what put in in order to try and get Treasury funding you were referring to was an estimate with a small basically. That is what it boils down to. “e” which comes out of the COIN system. The Ms Ghosh: No. We put that figure in in order for answer may or may not fit the question, because Parliament to vote us cash. The best example to use we— for the purposes of Defra is that we have a cash flow issue. So, for example, we pay out money on Q237 Chairman: You have used a term there, the Europe’s behalf in order to pay into farms’ Single COIN system. Would you like to explain to Payment Scheme and Rural Development colleagues what that is? Programme for England, so we had to have a cash Mr Park: I will certainly try. My apologies if this flow that is covered by the cash you give us. We then gets too convoluted. get the money back from Europe, but we need to have from you a cover for the cash that we spend, and I think that is the distinction between the Q238 Chairman: We will stop you if it does. Estimates, the voted money you give us, and the Mr Park: Thank you. The Treasury obliges all departmental budget which we are working on, departments to submit monthly inputs of data that which is essentially the CSR settlement we get. In the track the spend in the department against the control SR settlements we get, we get a departmental totals and against the Estimates. So COIN is a expenditure limit. monthly return that we put in which, as well as reporting what we have spent, also reports what we Q231 Mr Gray: I think the technicalities may be will spend for the year, so an estimate of outturn defeating some of us round the table and possibly rather than a parliamentary Estimate. some— Ms Ghosh: I suggest we send you a note. Q239 Miss McIntosh: Just to be clear, you published one figure in February in the Spring Supplementary Q232 Mr Gray: Would it be possible— estimate for 2007–08 of 3.818 billion. Then, two Ms Ghosh: I would be happy to do that. months later, in the Treasury’s supplementary budgetary information, Defra showed an estimated Q233 Chairman: You can always come along to one outturn of £3.973 billion. If I have followed the of our regular sessions— Permanent Secretary’s answer, surely in those two Ms Ghosh: We have tutorial sessions on this. months there would not have been an overspend as Chairman: ---so we would be able to try and you have just said. On your own figures that you understand these in a little more detail. supplied to the Treasury there is overspend of £155 million. Q234 Miss McIntosh: Can I be clear? If Natural Mr Park: I am sorry, Chairman, I do not have the England were to say to the Committee that they had comparison between the Spring Supplementary been kept short, for example—I am not saying they Estimate and other numbers here. I think it would have, but if they had— probably be better if we gave you a written response. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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Q240 Chairman: You said to us that you had to and we even included what we call the “rugby balls make an additional cash call of 155 million between picture”, which shows you what is in Estimates and these two periods. That would be compliant with what is in the budget. your important point about the fact that we are talking about Estimates in the parliamentary sense, I appreciate that, but even the word which is a call on cash as opposed to the total figures Q244 Chairman: “estimate” has a connotation of, “This is what we of expenditure which the department is making. think we will do”, not, “This is a call for cash”. Does that provide a rationale? Ms Ghosh: A capital “E” Estimate as opposed to a Ms Ghosh: I still think it would be easier if we wrote lower case “e”. to the Committee explaining the various stages. Can I take it to a strategic level? Because the question of coming in on your Departmental Expenditure Limit Q245 Chairman: If you start oV with the word budget is something that actually you can only be “budget” or “forecast”, then I think we can follow certain of—. There are all sorts of issues that the through the logic. NAO has to confirm and flows, for example, from Ms Ghosh: Certainly. local government that we have to check up on. I said Chairman: So we are going to have something on the we are optimistic that we are coming in on balance. first question that you are going to write to us in Any statement we made in February does not relate those terms about, for which I will say thank you in to the end of year position. May I make one other advance and move on to Peter Soulsby. comment? The only additional funding we have been given, as it were, real funding into our budget that we have been given in the course of the year, is £22 Q246 Sir Peter Soulsby: Can I take you to one aspect million from the Treasury which they agreed to give of the budget that I think we do have an us to finance our voluntary early retirement scheme. understanding of, because it is something we have We have made no additional cash call on the explored with you before, and it is the question of Treasury. At some stages in our Supplementary End Year Flexibility? Estimates we have transferred money, say, from Ms Ghosh: Yes. programme into admin, but we have not demanded any more money and we have come in, as it looks at Q247 Sir Peter Soulsby: I know it is something that the moment, within our public expenditure limit. in the past the department and the Treasury have had rather diVerent views on and there has been perhaps a little bit of discussion in previous years to Q241 Chairman: The important point is that we are still living in a situation that when this Committee reach a common understanding. I wonder whether asks for financial information it is not that you were you can reassure us that that common not providing it— understanding has now been found? Ms Ghosh: No. Ms Ghosh: Absolutely.

And that the situation you ---but the format is very much Q248 Sir Peter Soulsby: Q242 Chairman: have, I think, of some 29 million that you are couched in terms of, if you like, the parliamentary wanting to have that flexibility for is something that mechanisms for the approval of moneys; and you has been agreed between yourselves and the have made the important point that those moneys Treasury and we can be reassured that we are not are about the total cash flow (in other words, going to have the situation we have had in sanctioning expenditure from your department), previous years? whereas by and large what MPs are interested in— Ms Ghosh: The issue of End Year Flexibility does you started out the year going to spend X, Y or Z on not, as far as we know, arise in relation to 2007–08 various programme—is how are you doing, where for the main department. This issue of End Year will you end up and, if you are above or below, why? Flexibility that we have mentioned in our Estimate What is the answer? return is a special deal for the Forestry Commission. Ms Ghosh: Exactly. This is the first year where the Forestry Commission has come onto our books as part of our budget. That Q243 Chairman: What I would say to you is, when is, as I say, a special deal, there is no question that you do write to us, bearing in mind we are very the Treasury will change their minds on that, and so straightforward people, if you have to write to us we can budget on that and the Forestry formally by all means, but could you please send the Commission can— guide that puts it in layman’s terms to us: because part of the exercise of transparency is being able to Where were they before they came put a language forward that normal people will Q249 Chairman: onto your books? understand? Ms Ghosh: They were with the Scottish Executive. It Ms Ghosh: Yes, certainly. We have not yet had was a separate vote, I am told. I do not know what feedback from the Committee on this, but we very committee they reported to. much tried to do that in the note we sent you recently on our Estimate for the coming year. So we have tried to translate it into the diVerence between Q250 Chairman: We thought they were under your Estimates and Departmental Expenditure Limits, policy umbrella. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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Ms Ghosh: No, forestry as a policy is under our specific targets. The first task was to try to work out umbrella, forestry in England, but they did not come how much our diVerent programmes contributed to onto our budget. They have now moved onto our the diVerent DSOs, which were new—so this was a budget and that 29 million relates solely to the re-run or a new exercise because the DSOs were Forestry Commission. new—and so we ranked, in a way, diVerent programmes against their contribution to departmental strategic objectives. At the same time, Q251 Sir Peter Soulsby: So that means that when the outturn for 2007–08 has been finalised you do not as Helen says, you not only have the ring fenced see anything else being subject to flexibility, it is just funding but you also have some funding that is this single issue. committed, committed legally, because things are Ms Ghosh: It is that single issue, and we have constantly rolling forward, and so that is not really budgeted in terms of our budget for 2008–09, on in play at least for a year or two ahead. We used, as which we wrote to the committee, as it were, using one of our main tools, a diagram that showed the the budget we have got for 2008–09. There is no level of commitment against the level of assumption about End Year Flexibility, there is no contribution to the DSOs. That showed us, which assumption about overhang from 2007–08 and we was a good thing, that actually our programmes are not currently anticipating any overhang from score highly on their strategic alignment; it also 2007–08. That is purely saying this is the first year of showed, which was less good, that a high proportion our CSR/07. What have we got for admin, what have of our spend, if you look just six months to a year we got for programme, what have we got for capital ahead, is already committed so that the target area and we need to have a 50 million departmental that you are looking at to make savings to unallocated provision. So that makes no assumption compensate for the increase in budgets is quite small. that we are getting any money from the EYF. We then looked at, obviously, the things that scored less well—a number of our smaller programmes scored rather less well—and through the Board, with Q252 Dr Strang: Could you describe for us the the Director General, we turned the question round process of allocating your 2008–09 CSR total to a bit and said, “With the money we have got, what Defra’s departmental strategic objectives and your is it we are going to do?”, rather than just focusing associated public bodies? When you do that, could on that marginal area that we were going to make you indicate how you take into account the strategic savings, and that helped us then think about what priorities, for example, that the Secretary of State set the overall strategic direction of our budget needed out to this Committee? How involved are ministers to be. Through that process we also had regular in this process? How much detail do they get into? discussions with Hilary Benn and we had two away- Ms Ghosh: I will ask Bill, in his capacity as leader on days with our whole ministerial team where we went strategy and evidence, to talk a bit about the detail through the position that we faced, the options that of the process. The main strategic priorities I we put to them, which added up to more than the described to Miss McIntosh. We had within our total adjustments that we had to make, and we CSR settlement some areas which were, as it were, worked through that with them and reached pre-spoken for, ring fenced or already committed. conclusions in that way. So it was a process of trying Obviously, the additional flooding money we had to align with our strategic objectives as far as the got was that. We were given additional money for current levels of commitment allow. It takes quite a PFIs for waste infrastructure, we were given long time often to unwind programme expenditure, additional money for the Environmental because often people’s jobs are dependent on them, Transformation Fund, which (actually I should have and if you cut things very quickly, then you have to mentioned earlier on climate change) is a significant make redundancy payments and so you lose the contribution both internationally and nationally to benefits in the early years, and so on. So it is quite research around technology on climate change. We sticky, which makes it more of an art than a science also have made the commitment, although we did to align it completely with your strategic objective, not get any additional money in CSR, to match-fund but that is the direction we are heading in. the voluntary modulation for the Rural Development Programme. So we had to find from within our, basically, flat cash programme budget Q253 Dr Strang: A brief follow-up to that. You the additional money, our element of the doubling of received your CSR settlement in October? the RDPE. So we had some things that were already, Ms Ghosh: Yes. eVectively, commitments. Then, of course, we had essentially a flat cash budget to assign between the Q254 Dr Strang: But the Defra Board did not make rest of our spend and an administration budget for its allocations to your associated public bodies until running ourselves that was going down 5%, 5%, 5%, March. I am wondering why that took so long, if and that is where we began the process. I will hand that is a fair question. Secondly, have you had any over to Bill to say how we structured it and how we sort of problems arising from the fact that the worked with ministers. allocations were made just a few weeks before the Mr Stow: We used a number of techniques really. start of the financial year? First of all, as well as having the two PSA targets, we Ms Ghosh: I have to say, it was 21 February, because have the eight departmental strategic objectives, and it was my birthday, when we made them. Two underlying those we have 30-odd what we call things: we wanted to make sure we got it right, which intermediate objectives, which are more like fairly was why we were spending some months doing it Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park discussing with ministers, but all the time, and plans of expenditure balance precisely back to the particularly through Bill, we were keeping our key breakdown that you agreed with the Treasury for delivery bodies in touch with what was happening. each of the three years in the CSR? So, in fact, by the time we arrived at, “We can now Ms Ghosh: What we have done so far is we have set a give you final allocations”, we had had a number of detailed budget for this year that we have just begun, discussions. These did not come as a surprise to 2008–09, and it had to balance. We did no over people. For example, the balance between capital programming, we made it a completely balanced and current spend that we were allowing them, and budget. Those are the budgets that we have given to so on, was something we had discussed and they our directors and programmes and projects and, were, I think, content with that. You had a number equally, we have delivered a balanced budget on the of meetings. administration spend—so head-count people, Mr Stow: Yes, I had three sessions in all with our travel, all of those sorts of things—and we have put delivery bodies collectively and then through the in a £50 million reserve for emergencies, because last particular sponsors for Environment Agency, year we had no reserve for emergencies and this year Natural England, we were in fairly constant we do. The process we are currently going through, discussion with them, because we need to and again it will be a much lighter touch because the understand the impact of particular levels of budget strategic direction is set, is agreeing budgets for on these organisations, and so there was a very good 2009–10, i.e. the second year, and discussing those dialogue, I think, with our arm’s length bodies. with the delivery bodies, and that is a process that is going on. We promised that we would give them those budgets by the end of August, but we Q255 Chairman: Just out of curiosity, what are the reporting mechanisms to ministers in terms of your obviously will be aiming to do it much more quickly. continuing financial performance? How do you Mr Stow: With their agreement. involve them in that? Ms Ghosh: We give to ministers the same report that Q258 Chairman: Is that, again, going to be the same we get at the management boards. So, in fact, we balanced budget as for this year? were at lunch-time with Hilary and ministers and Ms Ghosh: Absolutely. Stephen had sent in the April Board report on finance. We do that on a monthly basis to them and we discuss it at one of our weekly Wednesday lunch- Q259 Paddy Tipping: Tell us a bit more about the time meetings. So, they are kept in extremely close discussions with the delivery agents: because a lot of touch with what is happening in our finance, and your money goes to them. How does it work? Just Hilary personally has taken that interest since the explain what happens when you are round the table? moment he arrived simply because we have had to Mr Stow: As I said, during the process I had three manage our budget this year extremely closely to rounds with them and in those rounds I tended to cope with £60 million worth of emergency spend and open by describing where we had got to in the so on, so he has been very, very closely associated process, what the level of certainty was around the with it. numbers we are talking about, and so on, and spelling out the consequences of that for them, and then usually there was a sort of question and answer Q256 Chairman: Do the other ministers other than session, though when we came to talking about the the Secretary of State, Mr Park, have detailed position for 2009–10 and 2010–11, which was more discussions with you on a regular basis as to how recently, it was more of a consultation session— their portfolio of responsibilities is performing in which way would they like us to play this—and the financial terms? message that came through was a mixed message Mr Park: No, my meetings are with the ministers really. Yes, they want early certainty but they want collectively rather than individually. certainty. It was our judgment that we could not Ms Ghosh: But the directors general for each policy provide immediate certainty because we did not area have exactly those discussions, and so, for know at that stage what was going to be held over example, as Bill said, we had lots of discussions with into this year and might then move over into the Hilary and ministers collectively to settle our following year. There were a number of budgets for 2008–09, but, equally, every director uncertainties and so we said, “Okay, we will finalise general—so Mike Anderson on climate change, the budgets in August.” When it comes to the Andy Lebrecht—and now Katrina Williams—on individual dialogues with individual bodies, I have food and farming, and Peter Unwin on Natural not been involved in those but I used to be because Environment—had parallel discussions with the I was the DG for Environment, and so that would relevant ministers to make sure that they were happy involve direct talks between the relevant DG and to talk through detail, and so on. That is mainly Barbara Young, say, and that is much more a done through the directors general, who will all have dialogue about, “We think we can probably manage their own financial adviser. to give you so much. What does that mean in terms of how you will manage that budget?”, and so on— Q257 Chairman: Within the terms of the overall so a much more detailed conversation—but envelope of expenditure that turned out to be CSR collectively that is not quite the place for those sorts or the new comprehensive spending round, did your of detailed conversations. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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Q260 Paddy Tipping: Some of the delivery agents department are here to deliver in large part the have been gainers, the Environment Agency, for objectives of government, and, therefore, in some example? cases, actually the relationship should be one where Ms Ghosh: Yes. we are buying what government or Parliament set them up to deliver. It is interesting, and I think what Q261 Paddy Tipping: Some have been losers, big is so exciting about working in Defra is that if you losers, Natural England, WRAP, for example, stand take the Environment Agency or Natural England, to lose quite a lot. What is the nature of the they are also there as statutory advisers, so, equally, relationship? they are there as sort of watchdogs, and certainly the Ms Ghosh: I think those are two rather diVerent SDC is a powerful, fierce watchdog. So they are all issues. Natural England has only lost in terms of its the time doing two things, but some of the time it is spend in terms of the eYciencies that we always absolutely clear that they are there to deliver, anticipated we would get out of creating a single eYciently and eVectively, and it is for them to decide body. We have created a single body out of three in some cases exactly how, what Parliament and the bodies. We expected, and I am sure Parliament elected government want them to do, so it is always expected, to get some dividend from that. So, in fact, going to be a bit mixed. their budget, the five million diVerence, eVectively we expect you now to be producing eYciencies, but, Q265 Paddy Tipping: I am sure that is right. It is a of course, we had those discussions with Helen circular relationship as well. They then say, “This is Philips, and so on. In the case of WRAP, this was what we are finding to meet the change of policy”? very much related to a strategic issue for us, which Ms Ghosh: Yes. was, given the relative maturity now of the sort of Mr Stow: The programme/project way of working advice market, whether it is advice on energy which we have now very largely adopted in the eYciency or resource eYciency, actually the market department on a lot of our programmes boards, out there is quite booming, and the extent to which project boards, and so on, the relevant agencies will Government needed to finance, as it were, individual actually be there inside the tent working with us, and advice to individual companies we decided was that is an absolutely crucial part of the way we are getting less, so in fact we consciously took some thinking about how we make eVective policy in the money out of those sorts of BREW (Business department. Resource EYciency and Waste) money, for example, which Bill will know more about than I do, Q266 Paddy Tipping: Turning to your own budget, we consciously said, “As a matter of policy we will the main budget as it were, it is a really tight budget. make some savings there, so that, for example, we You have made some pretty hard choices. Can you can put some money into the Green Homes Service give us some examples of things that you are for the Energy Savings Trust.” So we swapped stopping doing because, basically, you cannot aVord individual advice to SMEs into things where we to do them? thought we would get more bang for our buck. So Ms Ghosh: Do you mean the programme spend that that is WRAP, which is a diVerent situation from we have in the department as opposed to hand out? Natural England. Mr Stow: This is obviously a very important part of Q267 Paddy Tipping: Yes. our relationship with our various bodies, but it is not Ms Ghosh: Bill, you work in the lead on that. the only part. We have been working very hard at Mr Stow: Helen has mentioned probably the main improving the whole nature of the relationship and strategic decision we took, which was that we would getting it onto a more mature level, and so there is reduce the level of funding of advice to individual a lot of work through what we call our government businesses and help for individual businesses, so that delivery programme that is aimed at doing that. We covered WRAP, it covered the Carbon Trust and it are negotiating individual deals with a number of also covered Food from Britain. So, looking right our agencies about how we will each behave, for across the piece, that was probably, I think, the example, so I think that is also helping the biggest thing that we consciously said, “We are relationships, which I would say now are probably V going to stop doing this.” There were a number of as good as they have ever been, with our di erent much smaller things that we have also either stopped partners. or cut back significantly, but that was the biggest one. Q262 Paddy Tipping: Do the agents see it as a relationship that is of equals, that their voice counts Q268 Paddy Tipping: All we could tell was that you and that what they say is being heard? could not go ahead with the new Veterinary Ms Ghosh: You would have to ask them that. Surgeons Act because of financial constraints? Ms Ghosh: No. I think there is an issue. A lot of the Q263 Paddy Tipping: I have. things we do are actually about people and about Ms Ghosh: And they say? lawyers and the money we have to spend through our admin budget. If you take the example of Q264 Paddy Tipping: It is a mixed response. legislation, as the committee is very well aware, we Ms Ghosh: It is a mixed response at the end of the have got quite a lot of legislation on the stocks at the day. It is the case that NDPBs and obviously our moment. We have got things like the Marine Bill, own executive agencies that are part of the which you will be doing an inquiry into, and that has Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park certainly required historically quite a lot of legal Q275 Chairman: What, verroa, in bees, not rampant! input, and the Climate Change Bill. Clearly, even as It is endemic in the bee population. There used to be bills are going through, they require revision, and so a wonderful line on the Defra map which every year on. We have still got a lot of work to do in terms of some hapless minister would draw and say “this was the implementation on the Animal Welfare Act, and a verroa-free zone”, and every year the bees ignored so on, so there is an awful lot of legal work, and the that, or at least the mites did, and they kept crossing conclusion that we have reached (and I think JeV the line until, in fact, the whole of the United Rooker has said to the committee), given the other Kingdom has become now a zone for verroa disease. calls on our legal resource, and in particular because It is endemic. discussions with the veterinary profession suggest Ms Ghosh: It is not one of the diseases on which our that they are not absolutely sure what they want this bee unit is focusing. legislation to be about, suggest that it is of relatively Chairman: No, because it is endemic. What! low priority, we will have to (and this is part of the Mr Gray: You cannot be serious. We have had hard choices) keep prioritising things and say. “If we debates on this in the House of Commons. Verroa give money to X, what are we going to spend less bacilli is by far the biggest threat facing the bee money on?” I have been listening with interest, for population in the world. It is a massive problem here example, to the reports on Farming Today this week in England and you are telling me that your bee lot about bees, and obviously we are keeping a very are not focusing on verroa. I find that absolutely close interest in the issue around bee health, but the astonishing. fact is, if we put more money into research on bees in our tight budget and the tight fiscal position, the Q276 Chairman: I was hoping you were going to choice is what do you spend less money on? That is bring clarity to try and address some of the criticisms what we will need to be doing. that were made in Farming Today about the department’s expenditure to deal with the disease Q269 Paddy Tipping: Let me ask you about the threat to bees because, in addition to disease, the Animal Welfare Act, because it is a flagship question of training bee-keepers was also raised as a legislation. key issue and, bearing in mind the central role of Ms Ghosh: It is. pollination of bees and the well-being of our crops is at stake, perhaps you could tell us what on earth you Q270 Paddy Tipping: There is a lot to be done by are actually doing? regulation. Ms Ghosh: I will certainly do that. We have not cut Ms Ghosh: Yes. either the funding in cash terms or the number of inspectors. There is exactly the same number of Q271 Paddy Tipping: And you are not meeting your inspectors now as there was five years ago. As you timetable to bring forward these regulations. know, as you will know from, I am sure, earlier Ms Ghosh: JeV and Hilary have recently been talking inquiries, we also employ seasonal bee inspectors; so to the team about this, and we have agreed a that is a process that we are ramping up at the resource. We have, in fact, agreed some additional moment. What we are doing (and this was, I know, people resource into that team to make sure that we the subject of some parliamentary interest) is can fulfil our parliamentary commitments on that. making sure that just at the moment we target the So that is what we are going to do. bee inspection resource on instances where colonies appear to have collapsed for some reason. We do not Q272 Paddy Tipping: So when I am told that the believe, again, as I know a series of PQs have animal team has been cut from 30 to 20 and the highlighted, that we have colony collapse and Animal Welfare Act Implementation Team from disorder here, but, nonetheless, we are using our bee four to one, you are reversing that trend now? inspectors to go and look. If a bee-keeper reports Ms Ghosh: On our project and programme basis that it looks like a collapse, we are going to look at it: what we are doing is saying for the purpose of the that is how we are targeting our inspection resource. project, which is to deliver the regulations, we are Obviously, if it were the case that we felt that there putting some more people in and then they will go was an issue or we needed to increase the level of away again, which is the beauty of our project and inspection, then we would think of diverting programme team approach. resources into the area, but at the moment I am advised by the bee unit at our central science Q273 Chairman: I am glad you mentioned bees, laboratory that they have enough resource, but we because I have been getting up early in the morning are monitoring the position. and listening to the same programme that you have. I think it was on Tuesday, the assertion was that you Q277 Chairman: Are you rebutting the lines of had been cutting back on the amount of inspection criticism in Farming Today, because I am sure you at a time when disease in the case of verroa was now just did not listen to it on holiday? rampant. Ms Ghosh: What I am saying is that we have not---. Ms Ghosh: I do not think so. I think the generic criticism in Farming Today is, “You have cut the number of bee inspectors and you Q274 Chairman: What! have cut the amount of money you are putting into Ms Ghosh: I am sorry, I am not a technician on this. bees in general.” We have not cut either. What I am I do not think that particular disease is rampant. saying is what we are doing, particularly in the light Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park of the concerns there have been on part of the bee Ms Ghosh: Yes, indeed. We have agreed that they keeping community on apparently some colony can expand the team in order to do those regulations collapse issues, which may as much be to do with bad and then, when they have done the project, those weather and the growth of viruses as the bees all stay people will move to something else. in their hives, we are making sure that the inspection resource we have focuses on those extreme cases. Jonathan Shaw is our minister on this and I know he Q285 David Lepper: Is it possible to give us any is answering, or about to answer, a series of indication, for instance, of when the regulations in parliamentary question on this. relation to pet fairs might be available? Ms Ghosh: I am afraid I do not have that information. I will come back to you. Q278 Lynne Jones: Can I come in? You said that you had not cut it in cash terms. Ms Ghosh: No, we have not. What we have done is Q286 David Lepper: All right; thank you. Natural kept it steady. It will therefore have gone down in— England: you have said already, in answer to an earlier question, that bringing those three organisations together as one in Natural England Q279 Lynne Jones: So it is a cut then? has lead to eYciency savings, and the cut in Natural Ms Ghosh: No. I will say exactly, as is the case, we England’s budget reﬂects that. have not cut it in cash terms. In real terms it will have Ms Ghosh: Yes. gone down slightly, but we still have exactly the same number of inspectors. Q287 David Lepper: So it is clear, is it, that Natural England will not have to cut back on any of the work But it does sound as if you are Q280 Lynne Jones: that it should be doing in order to accommodate shutting the stable door— those cuts? They will all be met by eYciencies. Ms Ghosh: No. There is no evidence that horse has Ms Ghosh: They will be met in various ways by bolted. What we are doing is— eYciencies. There is always the debate that we have when thinking about budgets going forward, as it Q281 Lynne Jones: You are waiting until bee- were, things that organisations would like to do and keepers say there is a problem before you are going things that they will be able to do. We have had no to look at it. feedback from Natural England that there is Ms Ghosh: What we are trying to do is have an anything signiﬁcant they will not be able to do as a evidence-based policy, which is what we are here to result of the reduction in what is eVectively an admin do. part of their budget.

Q282 Chairman: I think it might be quite helpful to Q288 David Lepper: The responsibilities they took have a comprehensive note on what you are doing, over on their formulation from other agencies will because clearly there is a lot of concern in the world continue. of bee-keepers about the challenges of disease and Ms Ghosh: We are confident they can deliver. the limited response in terms of the treatments that are available for verroa, and there are other diseases which bee-keepers face which you are also supposed Q289 David Lepper: You also mentioned the huge to be addressing. So when the Minister signs oV all legislative programme coming up including the these PQs and you have total clarity on the policy, Marine Bill and a particular aspect this Committee perhaps you could write to us and let us know what will be focusing on will be access to coastal areas. is going on, because I think the committee would be Natural England has estimated it will cost very interested. something like £50 million over ten years for Natural Ms Ghosh: Yes. One comment I will make on verroa, England to do the work necessary on the proposals and it is in the briefing, it says, “Verroa has been for public access. There is going to be some debate deregulated and is not under statutory control.” about how extensive those proposals are and that possibly is a controversial matter. Let us assume that Natural England has made a reasonable estimate, Q283 Chairman: That is because it is endemic. You £50 million over ten years. Will they get the just cannot stop it. resources to do that work? Ms Ghosh: It is not one of the diseases on which the Ms Ghosh: This is something the Committee will bee inspectorate is focused. want to discuss with Natural England oYcials in Chairman: The former minister is described by The more detail. My understanding is that the Independent newspaper as being in charge of bees, proposition is that any additional costs of coastal but there we are. The world has moved on and I shall access will be met from within what we can predict move on to David Lepper. as existing budgets. We will not be giving explicit additional funding but for example through RDPE, Q284 David Lepper: I want to ask about Natural which is significantly increasing over the next seven England in a moment, but can I come back to what years. We are not giving them an additional pot of Paddy Tipping asked about? You have said now that money which is for coastal access and that is the there are more resources being dedicated to the arrangement on which we are going forward. You regulations relating to animal welfare? will be able to explore that in more detail with them. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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Q290 David Lepper: I am sure we will do but you Ms Ghosh: We do. would not anticipate a situation, for instance where legislation, a Marine Bill, having been passed with Q296 Chairman: I am intrigued that the £50 million coastal access agreed on whatever terms it is in that you reeled oV for foot and mouth, blue tongue, avian Bill, and those organisations which have been influenza but there was not a contingency for errors lobbying so long for that right find themselves which might result in disallowance. frustrated because the work is delayed and delayed Ms Ghosh: We have a contingency provision before they have that access. eVectively for the impact of disallowance in the ring- Ms Ghosh: The pilot studies that Natural England fenced funding we have within our budget in each of carried out before they advised us on what form the the three years which is able to be carried forward of right should be, suggested that on the basis of a total of £270 million over the CSR period so we negotiation, on the basis of existing access, on the have that in a separate pot. We have eVectively two basis of the tools they could use, for example contingencies. through Pillar 2, it was possible to, as it were, join up the coastal path without significant additional spend Q297 Chairman: One labelled disallowance and one and that is the advice they gave to ministers and on labelled the rest. which we have gone forward. They will understand Ms Ghosh: That was given to us as a ring-fenced much more the patchwork of mechanisms they think amount so it has not impacted in any way on our they will use. other budget decisions. We have not had to take money out of anything else to pay for it; we were Q291 Chairman: You mentioned that the given it. If at the end of the process we do not need department have, for the first time, an unallocated it and we successfully argue the European provision of £50 million. How did you decide that Commission into a position where they do not £50 million was the right number? disallow as much as we have made prudent provision Ms Ghosh: The Treasury proposed that £50 million for, then the Treasury would take it back so it is not was the right number. Experience this year, which something that impacts on our budget. was of floods and then foot and mouth and then some bird flu, which amounted in the end to about Q298 Chairman: If there were to be, and we hope £50 million suggests that is probably about right. there is not, something that came along which was a contingency that caused for a call on government in Q292 Chairman: Is that built in at £50 million for excess of the £50 million you have, is it a question of each of the three years in the CSR? you going back to the Treasury with a call on the Ms Ghosh: We will have to have £50 million in each general reserve, should that be necessary or has the of the three years. Having set the budget for this year Treasury said you can have £50 million as a we would need to equally make provision for £50 contingency fund but anything else you meet out of million in the next year. Depending on the outcome cuts elsewhere in your budget? of events in the course of the year it may be that part Ms Ghosh: To be clear, it is £50 million within our of the £50 million, if we do not spend it all, is flat cash budget. We started oV saying we will take available to carry forward but that would be a £50 million out. debate very much for seeing what had happened by the end of the year. Q299 Chairman: You have shown your budget to the Treasury, tick in the box. £50 million is our reserve, Q293 Chairman: I was going to ask do the same rules our contingency fund. The question I am asking is as on end-year flexibility apply to that. you are being so very careful with your money if Ms Ghosh: I do not know. That would be a debate contingencies occur that exceed £50 million would to have with Treasury at an appropriate time in the you have to meet those out of your total envelope, in year. other words so other programmes would have to be reduced, or do you still have power to go back to Treasury. If some brand new never heard of before Q294 Chairman: Do you always just accept what the animal disease descends upon us and you find Treasury say in situations like this? yourself having spent £100 million dealing with it, Ms Ghosh: They have the power to give or withhold whatever it might be, do you have to meet the £100 money. I do not think we could argue with them million or do you go back to the Treasury and say about it. we never thought of this one? Ms Ghosh: As you will be aware from your Treasury Q295 Chairman: It makes a sensible budgetary experience, that would depend on the scale of the approach, based on the experience of what certain emergency we had to deal with, the unexpectedness unplanned for contingencies cost you in the previous of it and what state government finances were in at period, but I was interested to know whether you the time. The experience of this year suggests, and had yourselves carried out some kind of internal indeed I think a prudent Treasury will always say exercise to determine what a proper contingency this to departments, their first expectation is you will reserve, because that is what this is, should be. Now, meet costs from within your existing programmes. If for example, and we will come to talk about it in a you can demonstrate that is absolutely impossible, little more detail later, you have, as a department, to then you may make a call on the contingency accept the financial responsibility for disallowance. reserve. As you know, that occasionally happens. It Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park did not happen this year and we were able to contain WRAP, are all in diVerent but quite similar ways these costs, I am happy to say, within our existing supporting diVerent sectors: citizens, companies, programmes. There might always be a circumstance raising consciousness in a similar sort of field. The in which you would go to the Treasury but the fundamental issue that the Review is looking at is, is Treasury might or might not be in a position to help. that sensible or has it just arisen by chance. The fact that both the private sector market in terms of advise Q300 Miss McIntosh: Could I ask why you decided and particularly leading companies, and indeed to stop the funding for Food from Britain after the small and medium enterprises, are already out there coming financial year? What do you think the grasping the nettle and setting an excellent example impact is going to be on the British producers who in terms of carbon reductions and other used to benefit from that? environmental eYciencies means we have got over Ms Ghosh: I believe—and I think I am probably the hump of having to proselytise and tell everybody going to get my study wrong—that the idea that in to be doing things and actually there are already the long run Food from Britain, or the kind of sources of advice that they can get. Actually the activity carried out by Food from Britain, should machine is now moving and that is why we have become the responsibility of the industry is reached the view we have. At this stage we are still something that has been part of our strategic giving significant funding to WRAP and to Carbon approach for a number of years. Therefore, when we Trust. WRAP this year is getting £43 million and five were looking at the choices we had to make about years ago it was getting £30 million and in 2001–02 our funding over the next three years we thought it was getting £6 million. We are still financing these again about this issue. Was now the moment, given quite substantially but we just need to look through other funding pressures, to transfer the activity? The the review of whether it is a sensible way of spending conclusion we reached was that now was the the money through all these organisations. moment to transfer the activity. What is happening at the moment, and my food and farming team is closely involved in what is happening there, is that Q303 Lynne Jones: Before the Review was carried negotiations are going on, for example, between UK out you decided that WRAP would get a 30% cut, or Trade International, the Food and Drink thereabouts, whereas the Energy Savings Trust Federation and others about taking forward the would get a large increase. activity. Obviously it is an incredibly successful area. It is something where our exports are doing Ms Ghosh: Because we specifically wanted the extremely well. There is obviously a close economic Energy Savings Trust to do work with individual interest on the part of the producers in maintaining householders on the Green Home Service. That was it and now seemed the time to us to withdraw our a very specific project we wanted the Energy Savings funding and find a solution supported by the Trust to do. industry and that is what is going on at the moment. That was a political priority. I Do you know if in other Q304 Lynne Jones: Q301 Miss McIntosh: am interested in one particular organisation because countries like Denmark their Department for it is based in my constituency and that is the Agriculture similarly support their industry? Ms Ghosh: I do not know the answer to that. National Industrial Symbiosis Programme. Although you said earlier that delivery organisations were kept informed about your Q302 Lynne Jones: There has been some reference to discussions on the budget, they last year were led to the support organisations that have the aim of believe that because they had been so successful in cutting CO2 emissions and you have set up this the amount of carbon reduction that had been Delivery Landscape Review. You said earlier that brought about by their per pound expenditure they this was because of the maturity of the advice were going to have a substantial increase in their market. Given the importance, and it is one of your budget and yet they have ended up with a substantial main objectives, of reducing CO2 emissions cut. This is an organisation that is not providing presumably you anticipate that the cuts in V programmes such as WRAP and Carbon Trust, and direct advice but is about bringing di erent so on, will not lead to any detrimental eVect on the companies together. I wonder whether that was a wise decision. It is reasonable that these budgets delivery of CO2 emissions within business and the public sector. You have decided to make those cuts should be brought together but you have in advance of the Review. As a result of the review substantially cut that very successful programme what savings do you think you can make? What which has been delivering. eYciencies are going to be achieved coming out of Ms Ghosh: That particular organisation was one this Review that are going to ensure that business which I know ministers discussed specifically. There and public sector organisations actually continue are issues, as I have said, in order to finance some and perhaps do even better in their CO2 reduction things we have had to make decisions about others. targets? I can assure you that we did specifically discuss, at Ms Ghosh: The focus of the Review is on the one of these ministerial events that I described, the question of the number of organisations we position there and the good work they were doing currently support who are in a similar sort of field. but reached the conclusion we did about their The Carbon Trust, the Energy Savings Trust, funding. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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Q305 Mr Grey: What is it? Q308 Chairman: You are supposed to be the Ms Ghosh: This company has too many of market leader. something or it has some waste and another Ms Ghosh: In some areas we are the market leader. company says they could use that. It is basically a swap, a marriage broking service between company Q309 Chairman: Given that you have spent all this A and company B: “I have too many desks. I need time putting out your priorities and working out some desks”, and they do a marriage broking service your budgets and where you are going in a very rather than send things to landfill. precise fashion, where are you going to be in a year’s Mr Grey: I am glad it has been cut by the sound of time on the league table? What is the target? it. It sounds like a useless quango to me. Ms Ghosh: I would like to be a five star department, i.e. in the top group. The SDC report was looking at Q306 Lynne Jones: It has been very successful. In 2006–07 and not 2007–08. I would be hoping to see terms of its expenditure the actual savings that have a significant reduction, and we will be putting out been achieved have been substantial. Whilst I these targets in the summer so you will be able to understand the particular problems you have, it does hold to us to account for this in our overall carbon seem to me that a programme such as that you need footprint. I think we will see success on waste but we to make sure in your Review—and I am not may need some investment around water. The other necessarily advocating how it should be done—that thing we are doing is investing in green IT. We will some mechanism is in place to ensure that the work be getting shortly laptops, IT systems, which they are doing is continued and expanded because of automatically do things that shut oV so that you do the importance of the outcomes they have achieved. not have to worry about human error in failing to Ms Ghosh: When we are discussing with ministers turn your screen oV at night, that will happen budgets for next year I will certainly take that back, automatically, and there will be very low energy in particular, to Joan Ruddock who is responsible. screen savers and so on. We are about to be the first ever outstanding BREEAM award, BREEAM being the environmental awards programme, for our Talking about environmental Q307 Chairman: building at Alnwick. That is the first time any delivery, I notice that the department, now headed building has got outstanding and it will be us. We are by your former Secretary of State, is number one on leaders in some areas but we need to catch up on the Sustainable Development Commission’s latest some of that basic housekeeping stuV. chart of top performing environmental departments We shall hold you to account. and you are still struggling mid-table. Chairman: Ms Ghosh: The Department of Health is top in the latest SDC report. The Foreign OYce is coming up. Q310 David Taylor: Do you not think you could In the Department’s Sustainability Leader have greater contribution towards energy savings if Programme we are mid-table though we have instead of persistently outsourcing every IT improved. We were three stars last year and we are development within sight and within the department four stars this year. We fell down on three areas: you were able to use your own in-house skills and energy eYciency, waste arisings and water use. Our thereby avoid costly over-sized delay and over- energy eYciency falling oV is for two reasons: one, budget systems of the classic kind that Defra has because we have closed down a number of buildings made its own? and moved into a smaller number of buildings so the Ms Ghosh: If I go back to the green IT programme energy use of any single square metre in the that we have, that is absolutely in partnership with department, which is now occupied by two people IBM. A key element of carbon footprinting on IT is on a computer where previously there was only one, the cooling you have to do to keep your servers cool. has actually reduced the eYciency per square metre We have been working with them and we have been but we are working on that. On waste arisings we achieving significant improvements in that. Actually have around the department a Bin the Bins they are being very positive partners with us in our campaign so we have no bins next to our desks any greening of the department. Their service to the more. We have to take all our rubbish to recycling department in terms of all the measureables is bins of various kinds which we hope will discourage significantly improving. people from throwing things away. Water is a bigger challenge to us because you need to do physical Q311 Dr Strang: How does the department plan to things to buildings to reduce water usage but we are shift its recourses to match the two new PSAs that focusing on that. This is all within a programme we you take responsibility for, especially as you have are funding, and which Hilary Benn asks us about already indicated most of the additional spending every week, to improve our overall carbon footprint. has been on waste management and flood defence? For example, we have just done, which is a first for Ms Ghosh: To take the second one first, in terms of Whitehall, a carbon footprint map of our total the natural environment PSA that we have I suppose activity: oYces, scientific laboratories, travel and the largest single new investment we are putting in anything we do that produces carbon. We will use that is the match funding of voluntary modulation, that as a base line for an action plan we will produce which is about £350 million in year one and rising in the summer. We are not complacent; we are through the period. That is a significant investment working hard. We are delighted that some of the big we have taken out of the flat cash budget. In terms departments with big carbon footprints are doing so of climate change, the title climate change means well in terms of hitting government targets. mitigation, international negotiations, Climate Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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Change Bill, setting our carbon budgets for the five they do have greater salience in that sort of way but year periods, but it equally means adaptation. within the department we are treating the Under our PSA also comes a requirement, and it is departmental strategic objectives and these board obviously in the Climate Change Bill, to adapt and programmes as key priorities for the department and so spending on flood defence and flooding issues is when we think how we are resourcing things these something that is a key part of adaptation. As I said are key priorities. earlier, one of the most significant things we have Ms Ghosh: In terms of the number of people we have done is we have put a lot more people into that area in diVerent parts of the department, we would be of the department’s activity. Whereas we only had happy to send you that. We still have very, very large one director before we now have three and we have numbers of people both in farming and animal made significant investment in staV to do that kind health. Of our 3,000 headquarter’s team, 800 of of negotiation and we continue to make the those work on food and farming and animal health, investment that we have made historically in climate which is probably still more than work on climate change related research including things like the UK change partly because that is a key licence to operate Climate Impact Programme in Oxford which will be area and one that is very important to the a very good tool on adaptation. department and indeed to the government. Although we have shifted resources, there are still Q312 Dr Strang: There are no specific PSAs covering very substantial resources going into those areas and agriculture or rural aVairs as I understand it. Does we have increased the budget for the Animal that mean these areas will be downgraded? Executive Agency and so on. Ms Ghosh: Not at all. I will hand over to Bill to talk about how they are going to happen. The structure of the new performance agreement the departments Q314 Dr Strang: This is a throw-away remark but I have is that you have the two big PSAs then you have was at a meeting this morning where the veterinary a series of departmental strategic objectives, some of profession were complaining that they did not feel which are subsets of the PSAs and some of which they quite had the clout now in the department they stand on their own. For example, strong rural had before. I do not know if that is fair but I leave communities continues to be one of our that with you. departmental strategic objectives, as does an Ms Ghosh: As a relative newcomer to the economically successful and environmentally department, my impression is that the veterinary positive agriculture industry. Of our eight DSOs, we profession have a lot of clout in the department. have one, for example, on handling environmental Obviously they are in the lead on any animal disease emergencies which covers animal health so we will outbreak. They play an absolute key part in also be reporting on how everything we do feeds into developing animal health policy and they absolutely those departmental strategic objectives. If you take enrich our science base which I am very proud of. the case of farming, farming is part of both helping We have not cut the number of vets, indeed we are us mitigate climate change and adapting to it. People just about to recruit some more. We are very clear we from my farming team and from farming need to keep up that professional guard. organisations are involved in the climate change work. Mr Stow: Underpinning the DSOs we have changed Q315 Lynne Jones: Why are you cutting the Warm the way we allocate money within the department, as Front Programme? we were saying earlier, to programmes and projects. Ms Ghosh: Clearly I have to speak with some care We have a dozen or so programmes that are held at here because there is an application for judicial board level, one of which is on sustainable food and review going through. As I think I have said to the farming and another one on successful rural Committee on previous occasions, despite the fact communities. For both of those the board will be that funding for Warm Front has risen very regularly monitoring how they are doing, whether dramatically over the last few years, we are still we have the resources in the right place and so on. spending £800 million over the period on Warm That is another safeguard that shows we have a Front, and if you add in the value of things like the broader interest in the department than in just our Carbon Emission Reduction Target adding those two PSAs. two together alone we will be spending something like £2.3 billion on, as it were, fuel poverty, energy Y Q313 Dr Strang: I do not want to split hairs but does e ciency targeted on lower income households over one conclude from what you said that the PSAs tend the period. We would say that the fact that the to have a higher priority and focus in your approach funding for Warm Front over the period will be than the departmental strategic objectives? tapering does not mean anything. It means nothing Mr Stow: It is fair to say that the new structure of in terms of a reduction in the government PSAs, of which there are only 30 for the whole of commitment to fuel poverty targets. If you look at government, is a very deliberate eVort to join up resources as a whole, particularly if you add in things government departments in the delivery of these like winter fuel payment to pensioners, you could PSAs so we have a number of delivery partners, actually say that our support is something like £20 particularly for the climate change one. The Prime billion over the period. We will defend very strongly Minister himself will be monitoring those through any suggestion that we are losing our focus on fuel the Prime Minister’s Delivery Unit and so on. Yes, poverty. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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Q316 Lynne Jones: The Warm Front Programme is Q321 Lynne Jones: You do have a statutory target a direct grant and there are also some limitations on but you are not able to tell me that you are going to it in terms of who it reaches. You are cutting that at a be back on course over a three year period on time when fuel prices are going up and when climate achieving that statutory target? That is not change is an important issue, therefore it is much adequate. better to spend money on insulation and energy Ms Ghosh: We have made a reasonable set of policies eYciency than on helping people met their bills. It in place to achieving it. seems bizarre given that you have a statutory requirement under the Warm Homes and Energy But you cannot tell me whether Conservation Act and yet you are cutting this Q322 Lynne Jones: it is going to be anywhere near. It might be budget. It does not seem the right thing to do. reasonable to say we may not be spot on but within Ms Ghosh: As you know the Warm Front budget has a 90% certainty surely you should be able to give me escalated very rapidly to its current levels from a some indicator. comparatively low base. We will still be spending Ms Ghosh: No, because of the various factors that £800 million over the three years. The extent to are involved at that moment when the statutory which we are cutting the Warm Front budget is not requirement comes into place, the various elements, very great. As I say, what we are doing is saying what prices, incomes, and all the activity that will have we have to do, in terms of looking at the gone on between then and now. government’s policy on fuel poverty, is not just one way of dealing with the issue but looking at the whole picture in terms of support that we are giving Q323 Lynne Jones: I am asking for the trajectory. to lower income households on fuel poverty. So far Ms Ghosh: As I said, what we believe we are doing is Warm Front has helped 1.6 million households and committing a reasonable level of resource to last year I think it was 240,000. We have helped, and achieving that outcome for all the reasons I have are still helping, large numbers of people. described.

Q317 Lynne Jones: But it is a very small budget in Q324 Lynne Jones: But you are not able to give me terms of the condition of our housing stock. any concrete evidence that you are going to be Although you say it has increased dramatically, it is anywhere near achieving the target. You are way oV still a very small budget in comparison with what is at the moment. You should be able to at least spent in Germany in terms of them bringing their indicate that you will be moving back in the right housing stock up to a good standard of energy direction. eYciency. Ms Ghosh: I believe that we will only be able to test Ms Ghosh: If you add in the energy eYciency that against the evidence of events. requirement on the energy companies, we are actually going to be spending 2.3 billion over the CSR period on it which is a substantial amount of Q325 Lynne Jones: Why have a target in the first funding. As I say, we believe that we have to look at place? it in terms of the total support being given and the Ms Ghosh: Because parliament agreed we would wider context which is why we made the decision we have a target. did but it will still be £800 million to Warm Front over the period. Q326 Lynne Jones: But you are going to ignore it. Ms Ghosh: No, we are absolutely not ignoring it. Q318 Lynne Jones: Even with CERT it is still a small £2.3 billion of resources is going in to achieving this amount of money in relation to the huge problem we over the CSR period of which £800 million is have in the condition of our housing stock and in resource towards Warm Front. We are absolutely particular that occupied by poor people. not ignoring it. We think we are putting in a Ms Ghosh: We believe we have made a reasonable reasonable level of resource to achieve the target. decision and set a reasonable priority. As you know, there are all sorts of factors involved and energy Q327 Chairman: Let us move on to animal disease prices are as much a factor in this because of the way issues. In your now much more precise budgeting fuel poverty is assessed. arrangements can you tell me for each of the CSR periods what is your current projection on Q319 Lynne Jones: When do you expect the fuel expenditure connected with bovine TB? poverty targets to be coming back on course? Ms Ghosh: We have not yet set budgets for future Ms Ghosh: I am not going to make any commitment years as I described before. As you know, as part of of that kind. the CSR settlement we agreed with the Treasury as part of the zero-based reviews that over the period Q320 Lynne Jones: But there is a commitment. overall we would take £120 million out of the animal Ms Ghosh: The government has in place what it health budget. In terms of spend on TB, which to believes are reasonable policies and a reasonable some extent is demand-led, although there is an level of funding but because of the issues around ongoing level of surveillance activity, we have fluctuating energy prices clearly making the assumed for this year broadly a flat level of spend. prediction that you described would be a very We have not taken any money out of TB for this year dangerous thing to do. but we have not set our budget for future years. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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Q328 Chairman: You told us earlier that you have a Q332 Chairman: If it did arrive, on that basis you fit between your department’s expenditure and the have extra money you can do what you like with. global totals that you had been given by the Ms Ghosh: It is most unlikely, on the timetable that Treasury for each of the CSR periods. Bearing in is on the table, that it would have any impact within mind you spent last financial year £76 million, so it the CSR07 period. is quite a significant item of your budget, in order to achieve balance you must have a number on a piece Q333 Chairman: Throughout the whole period? of paper somewhere to say this is what we think we Ms Ghosh: Throughout the whole period. might have to spend. Ms Ghosh: As I say, we made a conscious decision and this would be something that our directors of the Q334 Chairman: If that be the case, let us move on relevant bit of animal health will be doing in to matters connected with disallowance. You have deciding how to profile their budget for the year that made provision for £348 million for the financial we would assume broadly the same level of spend for year 2006–07 for potential disallowance. I am not this year. We were not assuming any significant quite certain how you arrived at that particular diVerence. We are not pulling funding out. number. Perhaps you could give us a flavour. 348 is a terribly precise number. How did you work it out? Ms Ghosh: We worked it out in a variety of ways. I Q329 Chairman: We know the incidence of the know it also includes some elements of disallowance disease is rising against the background where we hangover from the previous schemes but broadly know that ministers have yet to make their mind up speaking what we did, looking at the problems we on what their new strategy is going to be. Against a had with the SPS in the first year, we made some background of uncertainty as to what eVect that prudent estimates. I have to say that clearly our main strategy will be, you are just saying level strategy will be, both at political and oYcial level, to expenditure? argue this down with the Commission so I do not Ms Ghosh: If it turned out to be diVerent, then want to quote individual figures within it. The clearly we would have to transfer funding from disallowance in relation to the SPS essentially has elsewhere in the department. At the moment that two features. It is either a straightforward fine for was our assumption and that is the planning paying after the 30 June because we have not hit the assumption on which we are basing. 96.4% target or it is disallowance for payments made without due validation or with some element of inaccuracy. In the first year where we did fail to Q330 Chairman: Does that mean the money would come from within the animal health budget or when achieve our payment of the requisite amount by the you say elsewhere in the department it could be from June date that was a straight forward percentage anywhere? calculation. In relation to inaccuracy, we made some Ms Ghosh: In the first instance we would probably estimates. As you will recall, we did interim say is there any other element of the animal health payments that year and we did interim payments in budget, whether in some element of a compensation order to get money out to farmers without having regime or a surveillance regime, where the demand is appropriate cover from the Commission because we lower or where we think that on a risk basis we can believed that our customer service giving farmers the spend less, that is what we would do. By the very money was the more important thing. We have made nature of a budget which is a fixed amount, if there some calculation on the basis of that. Last year as is any increased demand in one part you need to start things improved at the RPA we hit our payment looking across the department to decide whether deadline of June 30 so there was no late payment. there is somewhere else from which you would be Where we made interim payments they were mainly spending it. We would probably start oV by looking but not entirely within EU rules. They were within the animal health envelope. compliant so we do not expect significant disallowance in relation to those, although there were some issues around data and entitlements that Q331 Chairman: You have been having discussions are likely to be the subject of disallowance. This year with the farming community about them making progress is better still. We have now paid 84% of the some kind of possible contribution in financial terms fund out. We are expecting to pay 90% of the fund to the control of animal disease. What have you out by the end of May and we are therefore hoping, pencilled in as the first likely date when you are going as last year, that we do not attract any late payments. to see some of that money? The issue this year would simply be around Ms Ghosh: I know we have made no assumption inaccuracies. We have not made interim payments about any of that money in the CSR 07 period. The because we started getting payments out so much only assumption we have made about reductions is earlier. It is an agglomeration of all those factors: the £120 million that I described where I think we are reasonable assumptions about likely percentages, already ahead of what we were expecting reductions the parallels with other countries, the experiences to be, mainly through increasing the eYciency, in that other countries have had and we have reached other words reducing the costs. We have not that view. That is our prudent view. We have cover factored in any cost-sharing element into our CSR07 from ring-fenced money from the Treasury for £270 plans. We are going through a consultation period, million of that. We are all the time assessing at what carbon proposals and it would require a Bill. We are point the disallowance might come through. We some years away from that. believe that we have suYcient cover in our budgets Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park to meet, if it were more than £270 million, and in Q339 Chairman: If we take CSR 07, do we see a particular having a departmental allocation falling trend over the three years in expenditure on provision, that it is something which for the the RPA because you had to make lots of contingent purposes of thinking about our budgets we can investments on its IT to get that bit sorted out? At assume essentially is covered. some point in the middle of CSR 07 the transition will be complete, will it not, to a flat rate area payment scheme? I presume at that point you will Q335 Chairman: When does the Commission have got the system working as it should have done estimate that the matters will be concluded? They right at the beginning. seem to have been hanging over you like the sword Ms Ghosh: As Tony Cooper, the interim chief of Damocles for a long time. executive has said— Ms Ghosh: It is very slow. There are some decisions they are going to make, not necessarily around us, Q340 Chairman: Is he still interim? this summer that might give us a clue but, so far as Ms Ghosh: We are just going through an we are concerned, getting a final figure is moving to appointment process now. Since he was doing such the right rather than coming closer. We are a good job I encouraged him to stay on but because continuing to make sure we make a reasonable under the Civil Service rules strictly speaking we had provision. not gone through a fair and open competition we have to keep describing him as interim but he has been here since summer 2006 but he is still doing a Q336 Chairman: You put £90 million into the CSR good job. 07 for each year in terms of disallowance. How have you based that number? V Mr Park: The £348 million that was the balance Q341 Chairman: You envisage a falling o . Ms Ghosh: As we have taken some funding out of the sheet amount was created as non-cash. What then Y needs to happen is that provision unwinds over a RPA for this year as e ciencies come through and number of years and the £90 million in each year of the investment comes back, we are expecting the the CSR period represents the unwinding of that RPA line to go down. As Tony has said, what we are anticipating at this stage is having worked extremely provision. The £90 million is expected to be cash hard this year to get data errors out of the system whereas the £348 million was an accounting entry. and the entitlements basis good and overpayments Ms Ghosh: EVectively it goes back to the £348 and underpayments sorted, we would expect million. They did not just pick 90, 90 and 90. On the whatever payment pattern we have in the 2008 basis of the estimate we made on this basis, they said scheme to be the model basis on which we move let us make a provision which is 90, 90 and 90. forward. We are expecting stabilisation. What steady state looks like is what we will do in the Q337 Chairman: Disallowance comes about because 2008 scheme. of error or delay. Is £90 million a year a price worth paying for error and delay? Q342 David Lepper: You told the Public Accounts Ms Ghosh: No, it is not. For all the reasons I have Committee that over the CSR period you expected discussed at length with the Committee we very the RPA to lose a further 1,000 staV working on the much regret that there was error and delay. There is Single Payment Scheme. Is that still the case? always I should say, and historically this has been Ms Ghosh: That is still the case. Although we do not the case, with a very complex scheme like the single have for the CSR period specific head count targets, payment scheme, rather like benefits, you would what we all have are administrative constraints. always expect there to be some level of disallowance and historically built into our budgets has been an Q343 David Lepper: Those estimated 1,000 staV are assumption that it would be around 2%. We would lost to the department completely? never expect to get to zero but over many, many Ms Ghosh: Yes, lost to the department completely. years an assumption has been with the CAP it would What we mean is that at the RPA staV, to use an old- be about 2%. style word, establishment would be 1,000 people lower. As the posts became surplus, what we would do, in the way that we would always do in the Q338 Chairman: Do you have a programme where department, you may get some natural wastage, you are trading oV reduced contingency for people would move, but in the first instance they disallowance against improved eYciency to try and would be oVered posts, if they were suitable, minimise? elsewhere in the department or in the rest of the Civil Ms Ghosh: As you know, we have invested Service. I do not know what levels of natural substantially in the RPA in terms of their wastage the RPA has at the moment. A large improvement programme. It has always thus far number of those you would probably get through been something that looks like excellent value for the normal turnover in that kind of operation or money in terms of the payback. We do have in our department. heads, in thinking about both the customers and in particular the customer service but also the trade-oV Q344 David Taylor: When you were last involved in between the one and the other, the idea of the that process, not you personally but your disallowance cost against the investment cost. predecessor, in terms of head count a lot of the head Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park count reduction metamorphosed into agency staV our budget any kind of net increase in monies who were greater in number. What level of agency coming in because of what we may do with the staV usage do you have in the RPA at the moment? industry but that is not the way the Treasury are Ms Ghosh: Very, very many fewer. I am very happy putting it. to send the Committee the updated figure. What Ms Ghosh: It is not the way the Treasury are putting Tony has been doing over the last year is converting it. I am simply telling you what it is we are actually most of the casual agency staV into permanent doing. I would be very happy to sent the Committee appointments so that is a proceeding that has been a note. going on this year both for economic and customer service reasons. The answer is substantially fewer Q349 Chairman: I think I would write a note to the than we had at the height of the problems but I Chancellor. would be very happy to send you details of that. Ms Ghosh: That is not describing our policy on Responsibility and Cost Sharing. That is about Q345 Chairman: I was asking a moment ago about making use of the existing powers we have to charge animal welfare savings and you told us that the £121 to get more income or look for other ways of saving million was going to be achieved by greater money on the animal health budgets. When I eYciency, is that correct? described eYciencies, we are making savings on the Ms Ghosh: Yes. animal health budget as much through eYciency so we are busy saving, and I will be happy to Q346 Chairman: On page 245 of the Pre-Budget particularise, a significant amount of that £120 Report, paragraph D12.4 it says: “ ...anincreased million already. We will be happy to write to you but sharing of responsibility for animal health and that does not hang on legislation or the new welfare with the industry including further structures. utilisation of cost sharing mechanisms. This will generate annual net cash-releasing savings of £121 Q350 Chairman: We will look forward to the letter million by 20010–11.” Could you explain the and the reaction of the Treasury to it. You have to seeming inconsistency between what the Treasury achieve a 5% annual eYciency saving in your believe is going to happen and what you have just department across the CSR 07 period. Is that going told the Committee? to be achieved by a dominance of changes in core Ms Ghosh: I am very happy to send the Committee Defra or is it going to be equitably put across both a note. What that describes is an assumption that core Defra and the bodies that you fund? what we would do by the end of the CSR period is Ms Ghosh: That 5%, 5%, 5% relates to the raise £120 million by charging people more for administration budget essentially for the core things we can already charge them for, the kinds of department, so it is people, it is procurement, it is tests and so on. travel, it is professional services; it is all those things. It does not have an impact on the programme spend Q347 Chairman: That is not what it says here. It says that we give out to the Environment Agency or the “an increased sharing of responsibility” it does not bodies we have described. It does not, on the whole, say a review of the charging mechanisms. It talks or I think it is does not at all, have an impact on the about responsibility. budgets of any of our executive agencies because Ms Ghosh: What I described is absolutely true. The they are, as most executive agencies are, funded new proposals on cost sharing, for example, if this through programme because it is delivery of was the conclusion that ministers reached, by raising services. The admin budget, which is where we have a levy is something that would only come into place to find the savings, is the core department. Clearly when we had legislation. The new responsibility of we will be looking, since we are always looking for cost sharing propositions, industry levies or however savings on programme spend as well, for eYciency. it might be done, a new body if it is a new body, do If Tony Cooper makes eYciencies at the RPA, that not impact on the CSR 07 period. It is rather like gives us greater scope on programme spend but the Estimates and estimates. That is not talking about 5%, 5%, is at the core department so we will be responsibility sharing in the same sense but is looking at it in a variety of ways. We will be looking actually talking about using our existing powers to for it through better procurement in grouping charge more. That is what that is talking about. together the procurements we do. We will be making sure we do keep a control on our head count Q348 Chairman: That is a remarkable use of numbers since they are one of the key drivers of our language. I am used to the fact that words do not admin spend. We will be making sure that we always appear to mean what they say on a piece of minimise the use of external professional services. paper but I am afraid “an increased sharing of We will be doing a variety of things to contain the responsibility for animal health and welfare with the minus 5, minus 5, minus 5. industry” seems to me to be an elegant use of words to sum up a direction of travel of your policy. I am Q351 Chairman: Could the achievement of those not for a moment disagreeing with your statement to targets be a combination of redundancy or us earlier, which I am sure was given in all good compulsory redundancy or both? faith, when you said we are not certain whether we Ms Ghosh: We have said to staV that we have made are going to get the agreement with the industry and, no provisions in the coming year for any kind of as far as I am concerned, we have not written into voluntary redundancy schemes. Indeed, the fact we Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park have slightly over-achieved on our head count Ms Ghosh: I am very happy to report to the reduction means we have some head room within Committee on the latest set of figures. I actually saw our admin budget for this year to recruit and refresh the latest set of figures on all three elements of our our skills base. We will be planning the number of eYciency, what we might call our Gershon people we need and the skills we need on an annual eYciencies, yesterday. I believe from those figures we basis through our new programme. There may be are confident that we are over-achieving on both the instances where we have staV who have skills we no cash savings we are committed to and the head count longer need and equally there may be skills we do not savings and are on track to deliver our relocations. I have in the department. We have not ruled out the think the situation has changed since then but I am fact that we might do some targeted, but obviously happy to let you know the latest set of figures we are it would have to be aVordable, departure schemes in about to supply to Treasury. the future if there was a group of people with particular skills that we did not need any more but Q355 Chairman: You are in the process of self- we do not have any plans for general VER/VES validating your improvements, is that not the case? schemes. Ms Ghosh: I do not think we tell them and they believe us. There is a process of external validation of our eYciency. Q352 Chairman: Have you a budget for redundancy payments? Ms Ghosh: No, we do not have any budget at the Q356 Chairman: Who does that? moment for redundancy payments and that is why I Mr Park: The NAO but I will let you know. We do said we are not planning any in this coming year. not just pluck the figures out of the air.

Q357 Chairman: You were like a greyhound out of Q353 Chairman: I am slightly confused. If you are the trap to say there is an external validation and going to achieve these targets, you may have to do it then, between the two of you, you do not know who over the period of the CSR 07. is doing it. Ms Ghosh: If you take people as the real driver of Ms Ghosh: We supply the figures to the Treasury. admin spend, and for us people are the real spend of We supply the figures that we get in good faith on the our admin budget, what you need to do is to make basis that we have agreed with the Treasury for the sure you have some idea over the period of how purposes of the eYciency programme. Given the much money you will have and about how many V fact, for example, that the Treasury always uses the people you will be able to a ord so we have given NAO for validating the figures we put in our PSA indicative budgets to directors. delivery targets, I am assuming that there is a Mr Stow: This year we have cut the pay budget for validation process. They will not just take these at each of the programme areas by 3% with a bit more absolute face value and, therefore, these figures that out of the centre which means that we think we will we supply are subject to scrutiny. I am very happy to be able to manage that through a natural wastage let you know what the scrutiny is but we are process. That is around the level of current conscious that we have to be accurate. voluntary departures. We have given indicative budgets which go down further in the following two years but we have a process now for shifting Q358 Chairman: I am surprised to learn that the resources around on a constant basis rather than in finance director does not know who is doing the one big bang every three years. We will have an external scrutiny because it is a bit like a company approvals process for new priorities which will mean saying “We think we have some external auditors at the same time we cut existing ones. We do need to who come along and we think they do some work for do some more in the area of workforce planning, as us but we are not actually sure who they are.” Helen said, because although the absolute numbers Normally a company will discuss with the auditors we have may be right numbers they may not be quite the process of audit and the methodology. That is the right people so we may have gaps in some areas part and parcel of a company’s letter of appointment that will be thrown up by our new flexible way of to its auditors, the methodology that is going to be working. employed, and there is a discussion as to how the audit should be done. That is partly helpful to the company in ensuring it can layout its financial Q354 Chairman: We have a few moments before the information in such a way as it satisfies the auditors, vote comes so if we have to curtail activities we may and they are aware of what the criteria is that drop you a line on some of these other points. I auditors are actually employed to do their job. I am wanted to turn to the information which the rather surprised that you seem unaware of the Committee has been provided on your overall levels auditors and clearly not aware of the methodology of savings in terms of your quarterly reporting they employ to validate the work that you are doing. schedule and your move towards eYciencies. In Ms Ghosh: I do not think this is surprising at all. The terms of waste implementation, the OYce of Gershon eYciency programme, although we have to Government and Commerce tables show that the supply information—and we are very happy to financial savings for the waste implementation so- describe to you the process in which we collect it—is called Procurement Project were £102 million below a programme that is led and driven by the Treasury. target by the end of December. Why has progress They have to assure themselves through their audit been so slow in this area? processes. I can absolutely assure you that we Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park understand the nature of our audit, both with the give to parliament or the accounts that we give to the NAO and European auditors and so on, and Treasury of how much I spend. It is a cross-cut of a Stephen could give you an excellent account of that. set of information that is put together for a very This is not part of a departmental budgeting process. particular purpose. It does not actually relate to my It does not form part of the departmental accounts. role as accounting oYcer. It has no salience in terms It is part of a cross-cut of data that the Treasury asks of my role as accounting oYcer. us to provide to support their programme, the programme they lead, to say have we or have we not delivered the Gershon delivery programmes. It is, in Q365 Lynne Jones: You mentioned head count. According to the figures that you have submitted fact, for the Treasury to both agree with us in V advance the nature of the data we give and to make you seem to have 945 extra sta at the end of March sure it is right. I am doing my best endeavours, and 2008 than was originally agreed in the 2004 will describe to you how we collect the information, Spending Review. You may tell me those figures are but I do not audit it. inaccurate, I do not know, but is this a problem for you? What impact will it have in future budgets? Ms Ghosh: This was obviously before my time. The Are you saying basically that Q359 Lynne Jones: original Gershon targets that were set were for an these figures are extracted from other figures which overall saving from the department and its agencies are audited and you understand the audit process over the three year period of 2,500 staV of which at for that? least 1,000 were due to come from eYciencies at the Ms Ghosh: Yes. It is a Treasury programme and RPA. At the same time we actually got some new there will be a basis on which my eYciency team tasks for which we were given additional head count have agreed with them that we extract the data, for cover. What I did as a result of the clear problems example from local authority information systems. that the RPA, and it becoming absolutely We will have agreed where the data comes from. On transparent that we could not expect them to make things like our head count, that is data we hold those savings, was negotiate a new target net of within the department and I am monitoring very savings at the RPA which we would achieve. The closely all the time. Indeed, I know how many posts 1,400 target that we have achieved was the have been relocated so that is actually quite straight subsequently negotiated target. What that is doing is forward information as far as we are concerned. taking us back to the CSR 04 target. We have achieved 200 more than that, of which 200 in the Q360 Chairman: I am surprised that you are not event, because of the improvements there, came conversant with the way that the audit process is from the RPA. It is because they are going back to carried out. the original target which we renegotiated with the Mr Park: It is not actually our audit. We are subject Treasury. to the audit but we do not agree the terms of reference. Q366 Lynne Jones: The discussion earlier on the Q361 Chairman: You have the financial targets that RPA is relevant. you are trying to achieve and you, therefore, have to Ms Ghosh: It is relevant. If they were to come and do show what you have done to achieve them. a snapshot again, the idea that we really would have Ms Ghosh: That is what we do. 1,000 savings out of the RPA, we will have done but on a slower track because of the problems with the Q362 Chairman: Then somebody externally comes SPS. along and says is that a valid number. Ms Ghosh: Indeed, and that is for the Treasury to do. Q367 Lynne Jones: The department has set up a Strategic Knowledge Capability Review and Q363 Chairman: I would have thought, from the appointed external consultants. I understand they point of view of somebody managing the are expected to report this month. When are they department, you might have been interested in the expected to report and can you give us any audit process. There are very few finance directors of information on the main conclusions and any a plc the equivalent size of Defra who would not be budgetary implications? interested in the way their auditors audited the Ms Ghosh: I know we have commissioned some company’s accounts. external work on how we manage risk across the Ms Ghosh: Our auditors do not audit these accounts. department and how we deploy evidence in relation They are not part of, if you use that analogy, the to that. What is the context you are describing? company accounts.

Q364 Chairman: The Treasury are auditing your Q368 Lynne Jones: I can refer to information from performance. the Science Advisory Council. They have set up a Ms Ghosh: Against a particular set of targets which, sub-group and they describe it as a Science as we have discussed before, is as much an issue of Capability Review. It has also been described as a what otherwise would have happened. It is not Strategic Capability Review. money that is within my control. It is local authority Ms Ghosh: It is certainly the case that Bob Watson, money on waste implementation and therefore, it our new CSA, has been working with the Science does not have any salience for the accounts that we Advisory Council and with others—and this is going Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

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30 April 2008 Ms Helen Ghosh, Mr Bill Stow and Mr Stephen Park to be the subject of an inquiry that you do—to look set up within the next four months or so. It is quite at our science capacity and our research spend. That a long process because of the way that academic is something that Bob is already working on. research is procured. Lynne Jones: There is certainly some confusion here because there is certainly a reference to external consultants having already been appointed and expecting to report. Q369 Lynne Jones: You have appointed external Chairman: Can I suggest, if there is confusion, that consultants. you write to the Committee in more detail about this Ms Ghosh: This is a piece of work I think which is and if Lynne has any further points we can write to about a point that the SAC raised for us which you in advance of that letter to make certain we can comes back to risk which is do we have an evidence get a comprehensive reply to the area of questioning. base about how the various risks that the Thank you very much indeed for answering our department faces all join up. questions. I am sure we shall be taking further Mr Stow: We are currently setting up what we call a advantage of your oVer to brief us on funding issues research centre which is bringing together a group of and in due course to have you back before the external researchers to help us with that and that is Committee. I thank you very much Mr Stow and Mr out to tender at the moment. I do not recognise it Park for your contribution to our aVairs this from what you are reading out but that we expect to afternoon.

Memorandum submitted by the Department for Environment, Food and Rural AVairs (Defra Priorities 04)

Defra Priorities—Questions Following Helen Ghosh’s Evidence on 30 April Thank you for your letter dated 13 May 2008 setting out the further information requested following the evidence hearing on 30 April 2008. Please see my responses below with the request in italics. I hope the Committee will ﬁnd this information helpful. If there are any further questions, please let me know. Helen Ghosh Permanent Secretary Department for Environment, Food and Rural AVairs 6 June 2008

QQ 225–231—DEL Budget

The exchanges on 30 April questioned a gap of £155 million between the Spring Supplementary Estimate forecast DEL for 2007–08 (£3.818 billion, comprising £2.929 billion resource Del and £889 million capital DEL), and that in the Supplementary Budget information (£3.973 billion, comprising £3.063.1 billion Resource DEL and £909.7 million Capital DEL). Some of this diVerence is, we believe, accounted for by the presence of the Forestry Commission’s spending in the latter figure. Please can the Department confirm this? The exchanges on 30 April questioned the gap between the Spring Supplementary Estimate (SSE) Budget DEL for 2007–08 and the Forecast DEL in the Supplementary Budget Information (SBI). Budget DEL is the maximum a department is allowed to consume in a year as set by the Main Estimate and only normally changed via a Supplementary Estimate1. Forecast DEL is our best judgement at any point in the fiscal year as to where we think we will end up by the end of the year. Forecast DEL is updated monthly onto the Treasury COINS system. The SSE does not include a Forecast, as the original exchange on 30 April understood. So the £155 million is the gap between the Budget DEL and the Forecast DEL. The Department confirms that £89 million of the £155 million gap between the SSE Budget DEL and the SBI Forecast DEL relates to the Forestry Commission. The balance of £66 million reflects Defra’s worst case forecast out-turn for the year which as made in February when the data in the Treasury system (COINS) that produces the SBI was frozen. Since the time of that forecast, the Department has continued to manage down the likelihood of any overspend such that by the time of the Select Committee session, we were confident that the most likely outturn was no overspend and this remains the case. We now wait for the completion of the audits of the Department’s resource accounts and those of the Non-Departmental Public Bodies that are part of our DEL Budget before confirming the final outcome. The Forestry Commission is not included in Defra’s SSE as in 2007–08 the Commission had its own completely separate Estimate. From 2008–09 the Commission is part of Defra’s Estimate (albeit on a separate Request for Resources). As part of the preparation of the 2008–09 Defra Main Estimate (but after

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Ev 130 Environment, Food and Rural Affairs Committee: Evidence

the SSE work was completed) the reporting structure within the Treasury system was updated by them to include the Commission. As the Treasury system can only hold one reporting structure at any time, this meant that the SBI tables included the Commission for all years.

Additional Questions

As noted above, the Supplementary Budget Information published on 22 April showed total DEL for 2007–08 of £3.973 billion. The Main Estimate 2008–09 (HC 479, page 479) and the Main Estimate Memorandum (page 4) also of 22 April showed total DEL as £3.913 billion: £3.022 billion Resource DEL and £891 million capital DEL. Please could Defra explain the £60 million diVerence between the two total DEL ﬁgures? The SBI 2007–08 data is a Forecast whereas the 2007–08 column in the 2008–09 Main Estimate is the Provision, which is another general name for Budget. Provision does not mean provisional out-turn and so does not mean Forecast. As both sets of ﬁgures include the Forestry Commission, the diVerence of £66 million is the Forecast overspend against Budget for Defra mentioned above less the Forecast underspend against Budget for the Forestry Commission of £6 million.

The Main Estimate 2008–09 states a provisional budget outturn for ﬁnancial year 2007–08 of £3.913 billion (HC 479, page 479). Figures published at the time of the Treasury’s Comprehensive Spending Review announcement last year (CM 7227, page 244) stated a total budget for 2007–08 of £3.508 billion. Please could Defra explain, and thereby reconcile, these ﬁgures

The Main Estimate 2008–09 total for 2007–08 of £3.913 billion is not the provisional budget out-turn (ie it is not the Forecast) but is the ﬁnal Provision or Budget for the year. The reconciliation between the two Budget ﬁgures is best summarised in the following table and then explained further below:

£ billion

2007–08 Budget published within CSR07 3.508 Add back depreciation 0.171 Add back time limited items in budget for 2007–08 0.214 Add net increase to Forestry Commission’s Budget in their Winter Supplementary Estimate 2007 0.012 Add net increase to Defra’s Budget in the Winter Supplementary Estimate 2007 0.008 2007–08 Budget per the 2008–09 Main Estimate 3.913

The total Budget for 2007–08 in the Comprehensive Spending Review (CSR07) was shown net of £171 million of depreciation. This is because the Capital part of the total Budget includes capital spending and so including the depreciation of those assets would lead to double counting. The ﬁgure quoted from the 2008–09 Main Estimate does not exclude this depreciation. The ﬁgure quoted from the CSR07 settlement is the baseline budget for 2007–08 for CSR07 purposes and so excludes £214 million for those items in the 2007–08 Budget that were limited to 2007–08 only and so did not form part of the negotiations for the CSR07 years. This is normal Treasury presentation. The time limited items were:

£ million

Fuel Poverty 105 Carbon Trust 20 Disallowance provision 67 Household energy 5 Transfer to DfID 5 Headcount reduction 11 214

The remainder of the diVerence is £20 million which consists of the net increases to the budgets of the Department (£8 million) and the Forestry Commission (£12 million) in their 2007–08 Winter Supplementary Estimates which were completed after the CSR07 report was delivered. Defra did not seek an increase to their Budget in their Spring Supplementary Estimates for 2007–08 and the Forestry Commission did not request a Spring Supplementary Estimate at all. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 131

Q 282—Bees

Please set out what Defra is doing to deal with the threats of disease in bees The primary focus for Bee Health policy is to agree a strategy, in order to identify priorities both for the programme work and for research. A draft strategy has been published for public consultation; comments have been invited by 29 August. Preparation of the draft strategy included extensive discussions with interested parties in the beekeeping sector, including the British Beekeepers’ Association (representing hobbyist beekeepers) and the Bee Farmers’ Association (which represents the relatively small number of commercial beekeepers). Once agreed the Bee Health Strategy will help determine priorities for action under the Bee Health Programme, particularly in respect of control of diseases. The Strategy will help to deﬁne who is primarily responsible for taking action, whether this be the government, the Bee Health Inspectorate or individual beekeepers. The draft strategy provides direction and focus for future work on honey bee health. Once the strategy has been agreed, in the light of public consultation, we will prioritise resources as necessary to tackle the agreed priority activities. It is important for beekeepers’ representatives fully to engage with the development and implementation of the strategy. A recurring feature of discussions is the need for a strong education programme, to raise beekeepers’ awareness of pests and diseases and their abilities to control them. This applies as much to newly emerging threats such as the exotic species Small Hive beetle or Tropilaelaps mites, as it does to Varroa. Although the Varroa mite (Varroa destructor) is no longer listed in legislation and is therefore no longer subject to statutory control, it remains a major problem for beekeepers. Bee inspectors have continued to give advice on management of Varroa both in visits to individual beekeepers and in the training courses they run, often in association with local beekeeping associations. Varroa can only be controlled by individual beekeepers, by following advice on treatment, both with chemicals and through appropriate hive management techniques. The draft strategy discusses the priority which should be given to Varroa as well as other problems.

Colony Collapse Disorder Colony Collapse Disorder (CCD) is a generic term adopted to describe the high level of colony losses that has occurred in recent years in the USA. The cause is under investigation; a suite of possible causes is being considered, ranging from stress caused by the substantial distances over which commercially-kept honey bees are moved for pollination of crops across the continent, to pesticide impact. High levels of Varroa are indicated, along with viruses such as Israeli Acute Paralysis Virus, which has emerged as a common factor. Losses in the USA are reported as 31% last year and 36% this; these were confirmed in a video conference with US experts on 13 May. In the UK the term CCD has been used by the Press and by beekeepers seeking an explanation for their own losses. The National Bee Unit investigates reports of higher than normal losses, but in many cases they find that losses are due to the incorrect application of Varroa treatments by beekeepers or other failures to manage hives correctly. There has been a gradual rise in the percentages of winter colony losses since 2001; this is thought to be due to the increase in resistance to some Varroa treatments, partly as a result of overuse of these treatments, for example when the Varroa numbers are below recommended thresholds. 2008 has seen higher numbers of colony losses reported by beekeepers. On 14 May 23.3% of colonies inspected had been found dead, compared to 17.6% on the same date in 2007 (although on a smaller number—4,500 compared to 7,600—because of the late spring and therefore the start of the inspection programme). The figure is inevitable skewed because it reflects problems reported to inspectors. The overall loss figure for the calendar year 2007 was 11.7%. Experts believe that these are the consequence of the build- up of viruses and other problems when the bees were confined to their hives for long periods during the wet summer in 2007, which also meant that they were unable to build up resources to carry them through the winter. Weak colonies are more likely to succumb to Varroa infestations. The situation was exacerbated by the long cool spring in 2008. If beekeepers did not compensate by providing additional feed, colony loss was more likely. In contrast, the recent hot weather in May has allowed healthy colonies to flourish.

Funding and Resources for the Bee Health Programme The National Bee Unit is located in Defra’s Central Science Laboratory (CSL). Defra’s Plant Health Division has had policy responsibility for the Bee Health Programme since 1 April 2006 and provides funds to CSL through a Memorandum of Understanding. By making adjustments elsewhere within its operation CSL have managed to maintain funding for the NBU for the Bee Health Programme at the same level, £1.3 million, for some years. Because of the erosion of inﬂation there has had to be some prioritisation within the Bee Health Programme in order to maintain inspector numbers. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

Ev 132 Environment, Food and Rural Affairs Committee: Evidence

Given the higher level of reported colony losses this year, accompanied by an increase in imports of queen bees to allow beekeepers to replace lost colonies, further resources of £90,000 have been allocated to the National Bee Unit. This will allow for an increased level of import inspections, additional bee colony inspections and increased diagnostic work at CSL.

Research

Commissioned research specifically for honey bee health has averaged around £200,000 for at least five years. In addition, honey bee health benefits from various other Defra-funded research activity, so that in 2008–09 total expenditure is close to £390,000. Projects include: — Assessing the eVectiveness of the shook swarm method for controlling European Foul Brood. — Development of a monitoring system for the small hive beetle. — The taxonomy of UK and exotic honey bee viruses: a molecular approach. — Research on bee pests and diseases in support of policy: Novel control methods for the notifiable bee pest and diseases—Small hive beetle and European foulbrood. — Streamlining honey bee diagnostic services. — Defra Biosecurity chip, project to develop detection system for viruses including bee viruses. — Quantifying the value of ecosystem services: A case study of honeybee pollination in the natural environment.

Q 285—Pet Fairs

Please indicate when the regulations on pet fairs under the Animal Welfare Act will be published and come into force

We have recently completed a review of animal welfare activities for the year ahead. Lord Rooker wrote to Mr Jack on 20 May to explain that our planned activities for 2008/09 include:- publication of information leaflets for the public and police on the dangerous dogs’ regulation; regulatory controls on greyhound race tracks; completion of the circus regulation feasibility study which, on reflection, Ministers consider is an area where we need to give further careful thought; regulation of web-screened animal fights, and subject to competing demands on resources, work to improve equine welfare. We will also continue to work on codes of practice for cats, dogs and game birds and begin work on a code of practice for primates. The planned activities reflect those areas where there has been most concerns raised in Parliament. Regulations on pet fairs are not as high a priority and no date can be given for when this area of work will be pursued.

Background note

When the then Animal Welfare Bill was introduced into Parliament in 2005, it was the Government’s intention to review the legislation regulating the selling of pet animals soon after the Bill had received Royal Assent and had come into force, as part of a series of secondary legislation to be made under the new Act. The main reason for pet vending being considered a priority was the need to address the issue of pet fairs in relation to the Pet Animals Act 1951 (the legislation that regulates the selling of pet animals for business purposes). There was some uncertainty as to whether pet fairs could or should be licensed by local authorities under the 1951 Act in the same way as pet shops are. However in 2006, while the Animal Welfare Bill was progressing through Parliament, the High Court made a judgment on a Judicial Review about the issuing of a licence, under the Pet Animals Act 1951, to the organisers of a pet fair. One of the ﬁndings from the Judicial Review was that local authorities could not issue licences under the 1951 Act to organisers of pet fairs, where these events involved the sale of animals, as part of a business, to members of the public. Thus, the High Court judgment removed the urgency to review the 1951 Act. It was also evident from the debates on the Animal Welfare Bill, that Parliament did not consider the selling of pet animals to be an urgent priority (in part because of the High Court judgment). Instead, Parliament considered that other issues such as the use of wild animals in circuses and the welfare of racing greyhounds to be more urgent. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 133

Q 314—Defra Staffing

Please set out the numbers of people (broken down by grade) in the diVerent divisions within Defra’s headquarters Please see attached Excel spreadsheet. (Annex A)

Q 345—RPA Staffing

How many agency staV are there in the RPA, and what was is highest that number has been (and when was it)? The number of employment agency staV at 1 May 2008 was 461 Full Time Equivalents (some are part- time so FTE is the best measure). The highest number of employment agency staV was 1,406 FTEs during October 2006.

QQ 332 and 346–9—Cost and Responsibility Sharing

The Permanent Secretary stated that Defra had not factored any cost-sharing into CSR 2007 plans for a £120 million reduction in the animal health budget. Given that, please explain further the statement on page 245 of the CSR that £121 million would be saved by increased sharing of responsibility for animal health and welfare with the industry, including further utilisation of cost sharing mechanisms As I previously explained to the Committee, we currently anticipate that some two thirds of our net cash releasing savings for animal health required under our CSR07 Settlement will be achieved through eYciency gains. The remainder will be met through a combination of actions including cessation of activities, transfers, cost sharing and charging. All of these actions are achievable under the existing animal health and welfare legislative framework and are in no way dependent or directly linked to the work being undertaken as part of the wider Responsibility and Cost Sharing Agenda for Animal Health and Welfare. The Responsibility and Cost Sharing agenda, which forms a separate and distinct programme of work within the Department, is central to the delivery of the vision set out in the Animal Health and Welfare Strategy for Great Britain 2004. The aim of the Programme is to make joint working between industry and government a reality: with joint decisions on how to prevent, control and eradicate animal diseases using jointly provided resources. The partnerships involved in tackling last years Avian Inﬂuenza, Foot and Mouth and Bluetongue disease outbreaks, are excellent indications of how industry is able and ready to take on greater responsibility and play an active role in managing disease risks as well as bearing a fairer share of the associated costs. The Government wishes to develop and strengthen this partnership and embed it in new arrangements and plans to consult on speciﬁc proposals later this autumn on how responsibility and costs for animal health might be shared in the future. Primary legislation will be necessary to eVect how animal diseases are controlled and funded in the future, although we do not envisage any such legislation coming into force before 2010–11 at the earliest.

Q 355—Waste Implementation Procurement Project

The OGC tables show that the financial savings for the “waste implementation—procurement project” were £102 million (29%) below target by the end of December. Why has progress in this area been so slow? Was the £102 million shortfall delivered by March 2008? The Waste Implementation Programme eYciency gains derived from data reported by Local Authorities for the Environmental Services workstream in their Annual EYciency Statements. In the earlier part of the SR04 period these consisted of a report in July, reporting the gains achieved by all authorities in the preceding financial year, and a mid-year update provided each November by a selection of authorities, reporting gains in the preceding half year. This process enabled progress to be updated twice each year. To reduce the reporting burden on local authorities, OGC and CLG decided that the mid-year update in November 2007 need report only the total gains made by each authority, without breaking this down by workstream. As a result, Defra has not been able to update progress made in 2007–08. Forecasts are based on those made in July 2007 and assume a steady progress throughout the year. The target for sustainable eYciency savings arising from waste management and street cleansing is £299 million per annum. The figure for progress to the end of March 2007 has been modified upward from the £245.2 million in the OGC Quarter 3 data to £248.4 million. For the reasons set out above, no further progress has been reported to December 2007. The current position is therefore £50.6 million short of the target. Local authorities forecasted that they would achieve total gains of £101.8 million for 2007–08, giving a total of £347 million which exceeds the target by £48 million. We expect these gains to be confirmed by local authorities in their Annual EYciency Statements due for submission in July 2008. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

Ev 134 Environment, Food and Rural Affairs Committee: Evidence

Q 357—Validation of Efficiency Gains

How are Defra’s eYciency gains externally validated? When did the National Audit OYce last review the EFRA reported eYciency savings and what conclusions or recommendations did they make? When will the National Audit OYce review the ﬁnal outturn against the SR2004 eYciency targets? EYciency gains for local authority savings are subject to external scrutiny from the Audit Commission. Defra’s own eYciency savings have been subject to internal challenge by the programme team’s account managers and the process for collecting data has been the subject of a review by our Internal Audit Division. Our approach to validating Executive Agency eYciency data collection was the subject of scrutiny by NAO as part of a wider review of OGC’s cross-government eYciency programme. Progress on delivery of Gershon eYciencies was the subject of a robust biannual moderation by OGC throughout the life of the programme. The EYciency Programme has been the subject of three OGC Gateway Reviews and all recommendations have been actioned. No recommendations pertaining to our process for validating data quality were made. We would expect any further external validation of the eYciencies we have claimed to be made by NAO commissioned by OGC once all data has been received and reported. Taking account of various lags in data collection and validation, OGC expect this to be the end of October 2008.

Q 370—Review of External Knowledge Capability

When will Defra publish the conclusions of Defra’s project to assess its external knowledge capability, on which the Science Advisory Committee is advising it? (see SAC (07) 08, 14 October 2007) What can Defra tell us at this stage about the review’s main conclusions and budgetary implications? Partly in response to the recommendations of the House of Commons Science & Technology Committee inquiry into Research Council Institutes, and partly due to operational need, Defra initiated an assessment of its strategic knowledge capabilities in October 2007. For the purposes of this assessment, strategic knowledge capabilities are defined as elements of the research base (expertise, facilities, data sets etc) that provide evidence or advice critical for Defra’s mission and that, if removed, would require substantial cost or time to re-establish. The purpose of the work is to provide Defra with a clear assessment of its current and likely future strategic knowledge capability requirements and how well these are currently being provided. Defra needs to ensure it maintains those capabilities which are central to providing critical advice and evidence for its policies and operations. The assessment will be used to: — enable informed strategic discussions with major evidence partners such as the Research Councils regarding the sustainability of key aspects of the research base; — directly inform the departments own longer term evidence investment plans; and — if necessary drive changes in the way such capabilities are supported by Defra Arthur D Little (ADL) Consultancy have been contracted through open competition to undertake this assessment, and will provide this to Defra in the summer (currently estimated to be July 2008). The project has slipped by a couple of months due to the need to ensure strategic linkage with a related assessment of UK land-based capabilities being led by the BBSRC. Defra and the BBSRC have been collaborating closely over the two related assessments and will continue to work together (and with other major partners such as NERC and ESRC) as the results emerge. There are currently no provisional findings from the review (these will likely emerge in June). The assessment will not make budgetary recommendations. It will be for Defra to determine what budgetary decisions to take as part of its broader evidence investment business planning, in light of the messages from the assessment. The project has been scrutinised and challenged throughout by a sub-group of Defra’s Science Advisory Council, SAC-C. The Science Advisory Council is an independent, non-departmental public body providing expert advice on science policy and strategy to the Defra Chief Scientific Adviser.

Defra’s Evidence Programme The Defra Chief Scientiﬁc Adviser, Professor Bob Watson, is currently leading eVorts to improve how Defra strategically manages and uses evidence. These eVorts are mainly being directed through Defra’s new Evidence Programme, which was formally established in April 2008. Key elements of this programme, including the development of an Evidence Strategy, were recently explored at a major workshop with key Defra staV, colleagues from the Environment Agency and Natural England and members of the Science Advisory Council. The Science Advisory Council will continue to play a role in advising and challenging Defra on this programme. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 135

The assessment of strategic knowledge capabilities outlined above is just one component of the Evidence Programme and the results of the assessment will inform the departments new Evidence Strategy (a key product of the Evidence Programme).

Defra/Research Council Collaborative Centre of Excellence on Natural and Environmental Risk

Helen Ghosh and Bill Stow referred to a risk research centre in response to questions 368–370. The Collaborative Centre is to be jointly funded by Defra, EPSRC, ESRC and NERC. A total of £1.2 million is available over three years from 2008, with each partner providing £300k. The mission of the Centre is to facilitate the provision of world-leading knowledge, understanding and managing of risk to provide an evidence base to inform policy development by Defra and other policy makers. The sponsors are currently in the process of selecting a winning bid. Full proposals are due by the end of May and will then be subjected to expert peer review. A ﬁnal selection panel will take place at the end of July and it is hoped that a grant to the successful applicant can be issued over the summer, with the director ready to work with Defra from October 2008.

Additional Questions on the OGC Efficiency Reports

OGC guidance [Signing oV eYciency data returns] states that there must be “Ministerial or Permanent Secretary sign oV” for eYciency data reported in the Budget or Pre-Budget Report. The same guidance (Annex 2) refers to points to consider before signing-oV eYciency gains, which include:

— Quality of service: departments must have quality measures in place and assessments against them must demonstrate “no reduction in service quality”

— Data assurance: are controls in place and operating as intending to ensure the completeness, accuracy and validity of data during collection, processing and reporting; where sample data is used, has assurance been gained that the data are representative; where data have come from external sources have clear guidelines been issued; where data have come from an external provider, what steps have been taken to conﬁrm the provider’s data is ﬁt for purpose; are processes and controls clearly documented; are staV adequately trained in the operation of systems; are responsibilities for operating controls clearly allocated?

Please describe how these requirements were satisﬁed by Ministers or the Permanent Secretary for the £603 million ﬁnancial eYciency savings published in table 2.1 of the document 2004 Spending Review: eYciency progress to December 2007 published alongside the 2008 Budget Report

The EYciency Programme OYce was established to ensure that the eYciencies that Defra agreed as part of the 2004 spending review were delivered. A further role was to ensure that performance and quality standards were not compromised where eYciencies were being delivered. Each initiative within the EYciency Portfolio adopted appropriate metrics for assuring that quality and performance standards were not compromised in the generation of eYciency. This aspect was monitored in a number of ways including output levels, customer satisfaction surveys, internal and external audits, achievement of Public Service Agreement targets, and corporate Balanced Scorecard measures. Examples of the listed approaches are set out below: Environment Agency—Environment Agency Corporate Balanced Scorecard. Performance data subject to EA audit and checked by EYciency Account Manager. Veterinary Laboratories Agency—was subject to an independent science audit, in September 2007, as part of Defra’s Quinquennial Science Audit Programme. The audit examined the quality and value for money of the Agency’s science as well as the scientiﬁc outputs over the last ﬁve years. In their report VLA was acknowledged as a “recognised centre of excellence”. Procurement—a quarterly Value for Money report was produced and validated by Account Managers. Most of the agencies conduct an annual Customer Satisfaction Survey as a requirement of the ministerial targets set for them. The surveys are sent to a cross section of customers to get a representative view and a numerical scoring system is used to collate the responses. The results are then published in their annual reports. Processed: 11-07-2008 00:22:23 Page Layout: COENEW [E] PPSysB Job: 379090 Unit: PAG2

Ev 136 Environment, Food and Rural Affairs Committee: Evidence

The OGC eYciency reports show that while the executive agencies were 20% (£9 million) ahead on their overall ﬁnancial savings target by the end of December, eYciency projects run by corporate services in the centre were some 9% (£15 million) below target. Why have central services been slower to deliver? Were the shortfalls in eYciency savings in central service projects delivered by the end of March 2008? The savings that were forecast for a number of corporate areas in the centre were end loaded towards March 2008 and we can conﬁrm that they were delivered by end March 2008. The savings include procurement which was a major contributor to the savings from the centre.

Please supply the OYce for Government Commerce [OGC] eYciency reports submitted by Defra to the Treasury for the period ending March 2008 Reports attached. (Annexes B–E) Department for Environment, Food and Rural AVairs June 2008 Processed: 11-07-2008 00:22:23 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 137 11 Annex A 2111218 17 2 111 1322 210 31 15 24143194551 6613273340 42 81 149 62 113 14 25 486 10 19 40 17 29 3 4 121 15 26 42 23 29 6 6 147 2241258147 124274510285 3 7 13 19 8 12 2 3 66 ce & Seeds 3 8 6 4 4 1 1 1 27 Y ciency and Consumer Division 3 8 8 2 10 1 32 Y ce of Climate Change Division 1 4 12 3 15 2 5 42 Y Climate and Energy: Household andClimate Markets and Energy: Strategy andDCCED Public Directorate Sector Level DivisionIndustrial Crops DivisionRadioactive SubstancesClimate Change EconomicsClimate, Energy and Ozone: ScienceICCAAD and Directorate Analysis Level DivisionInternational Climate ChangeO 3 2Environment Regulation Policy 5 DivisionEnvironment 3 Statistics & IndicatorsSCPW Directorate Level 1 DivisionSustainable Products and Materials 11 7 DivisionWaste 4 Implementation PolicyWaste Management 1Waste Strategy 2 8 2 2 1 2 1 8 9 1 9CAP Reform and Portfolio DirectorEvidence 5 & 1 Knowledge 3 BaseInternational Relations 1 1 5 6 1 4 2Delivery 2 Change 9 (P) 1 2 5Emergency Response 6 Capability 1Exotic Disease 3 Policy (P) 1 14 1 28 35 1 4 2 1Farming for 2 the Future 1FFTF 9 5 Director 5 1 1 2 8 9 2 10 7 6 26 1 1 2 6 1 3 3 1 3 13 6 6 1 17 2 2 8 4 19 5 1 8 3 16 1 1 45 6 20 8 3 1 3 1 36 7 3 1 13 1 4 1 24 1 1 1 8 2 5 19 6 2 5 24 6 4 1 1 6 5 5 14 1 2 3 2 9 4 28 1 13 115 1 3 7 1 21 1 7 1 17 2 17 2 4 35 Managing the Delivery ChainPlant Health & PHSI DivisionPlant Variety Rights O 1 8 8 14 6 9 14 66 4 9 5 4 1 1 1 112 38 Climate Change Group Divison SFCD Head Stakeholder Engage, Behavioural Change, Better Reg 6 8 12 24 7 12 2 2 73 ce of Climate Change Directorate Committee on Climate Change 1 2 4 2 9 ce of Climate Change Directorate Total Y Y Climate Change Group Directorate Total Domestic Climate Change and Energy Directorate Climate and Energy: Business and TransportO Sustainable Consumption and Production and Waste 6 Business Resource E 11 13 9 7 2FFG 1 Farming For The Future & Portfolio 49 FFG Farming For The FutureFFG & Food Portfolio Chain Total & Portfolio Animal Welfare Food Chain (P) 2 2 5 9 1 5 2 26 Domestic Climate Change and Energy Directorate Total International Climate, Air & Analysis Directorate Total O Directorate Sustainable Consumption and Production and Waste Directorate TotalFFG Cap Reform & Portfolio Total FFG Delivery Change & Portfolio Total 15 31 50 17 34 1 8 157 International Climate, Air & Analysis Directorate Air and Environment Quality 5FFG Delivery Change & Portfolio 4 9 1 DC and Portfolio Director 5 1 1 26 1 1 2 in Post (Full time equivalents)—31 March 2008 Annex A V Food and Farming Group FFG Cap Reform & Portfolio Cap reform & EU Strategy (P) 1 2 3 6 1 4 2 19 Climate Change Group Total Defra Sta GroupClimate Change Group Climate Change Group Directorate Directorate Business Management Division Division 1 3 2 2 AA AO 1 EO HEO 9 SEO G7 G6 SCS Total Processed: 11-07-2008 00:22:23 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 138 Environment, Food and Rural Affairs Committee: Evidence 11 11 426 72 9 3417 112 3 2 21 24 8 54 242131114 196121215752 22291 7127 52626249219 949293831595129293 2115574 3 7 82013135 1 7 10 30 12 16 1 5 82 838213729261214184 29 111 118 238 67 110 32 33 738 18 38 35 115 24 25 7 6 269 ce Division 1 1 2 Y airs & Marine Bill 1 3 5 1 9 V NEG Finance and Business Management Division 1 1 5 5 1 1 14 Marine & Fisheries Directorate HeadMarine & Fisheries Strategic PolicyMarine Team and Freshwater Biodiversity DivisionMarine Environment Management DivisionMarine Strategy and EvidenceSea Fisheries Conservation Div 1 3 1 2 1 6 9 2 4 1 1 2 1 2 1 4 5 1 2 3 1 3 3 1 1 13 19 1 3 2 1 18 8 Legal B LAPD—Litigation & ProsecutionLegal B1—Commercial, FOI, Establishments, StateLegal Aids B4—Fisheries, Forestry, Plants &Legal Seeds B5 SI Division Legal A1—Countryside 1 & Nature ConservationLegal A2—Aniaml Health & Welfare Legal A3—RPA Legal Services Division Legal A4—Farming & Rural A Legal A5—Water, Soil, 5 Ecology andLegal Know-How A6—Environmental Law 4CSD Directorate Level DivisionHuman Resources Division 1InnovationSecretariat 1 1 1 5 1 3 4 3 1 2 1 5 1 1 19 2 3 1 9 10 4 1 1 10 1 3 2 1 13 1 8 17 1 2 19 6 17 6 6 2 6 11 17 2 1 9 2 14 1 2 92 4 10 1 1 2 48 6 Legal B6 International & BiotechnologyLegal Business Unit 1 1 2 2 1 3 1 1 6 6 IT and Portfolio DirectorSurveillance, Epidemiology & RiskVet / Prof / PoolControl & Dealing with EndemicDirector Disease 1Responsibility and Cost Sharing 1 5 2 1 8 1 2 4 1 4 8 9 2 1 3 4 1 6 1 1 8 6 1 2 3 4 1 1 1 6 1 28 2 2 4 27 1 8 2 3 10 38 1 3 Natural Environment Group Directorate Natural Environment Group - Directors O Marine & Fisheries Directorate Total Services Rural, Farming, Animal Health andServices Environment Directorate Legal A Director Legal A Rural, Farming, Animal Health and Environment Legal A People & Performance Directorate Total Legal Group Solicitor and DirectorLegal General Group Directorate Solicitor and Director General Directorate Total LS DG Level DivisionServices Directorate Total People & Performance Directorate Contingency Planning and Security Division 1 5 9 4 3 5 1 2 2 1 29 Court Action Fisheries International and SI Legal B Services Total Food and Farming Group BSUFood and Farming Group BSU Total Business Support 2 4 2 1 3 1 1 14 FFG Food Chain & Portfolio Total FFG International Trade & Portfolio Total FFG Responsibility & Cost Sharing Portfolio Total FFG International Trade & PortfolioFFG Responsibility & Cost Sharing Portfolio International Trade Bovine TB (P) 2 12 2 14 4 11 4 3 10 8 5 3 6 1 2 53 1 34 in Post (Full time equivalents)—31 March 2008 Annex A V Legal & People Group Total Natural Environment Group DG Marine & Fisheries Directorate Fisheries Industry Management Div 2 2 7 4 4 1 19 Defra Sta Group Directorate Division AA AO EO HEO SEO G7 G6 SCS Total Legal & People Group Court Action Fisheries International and SI Legal B Director Legal B Food and Farming Group Total Processed: 11-07-2008 00:22:23 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 139 1112 183481126 246753127 246753127 1189 2 454 211178 11561 216 15 21 39 35 33 5 8 155 16 23 28 28 16 4 3 117 3 40 69 132 76 86 12 25 442 8 9 21 20 18 15 9 5 105 1241246135 215254216254 17 152 63 17 17 11 2 5 283 ce 4411 111 Y ce 1 1 1 3 Y Inland Waterways Advisory CouncilLand Use Project RLA Directors O 1 1 2 Rural Policy DivisionSponsorship, Landscape and Recreation Division 6 5 1 3 4 5 6 2 1 3 21 1 1 18 Drinking Water InspectorateEnvironment Agency & Waterways DivisionFlood Management DivisionLocal Environment Protection DivisionWater Directorate Level DivisionWater QualityWater Supply and RegulationNatural Environment Economics & StatisticsNatural Environmental Strategy UnitNEG Science DivisionRDPE Structural Funds DivisonRural Development Programme England DivisionWildlife & Countryside Directors O Wildlife Habitats & 1 Biodiversity DivisionWildlife Species Conservation Division 1 2 1 5 3 1 1 3Information Technology Division 3 1 3 1 1 1 3 1 1Financial Control Division 6 3Internal Audit 2 2 Division 15 1 4Procurement and Contracts Division 2 1 6Programme Project Management 2 Unit 7 2 3 7 8 5 1 6 2 1 4 6 1 4 4 5 2 12 1 2 10 5 1 10 1 10 3 1 5 1 3 1 2 1 2 1 1 33 2 11 4 7 1 2 4 1 28 4 1 1 6 4 14 2 1 1 6 1 14 21 7 6 1 1 8 7 2 1 11 13 29 24 1 6 2 12 27 4 10 1 9 3 10 6 5 8 1 7 10 4 4 3 3 54 1 1 1 24 50 16 1 24 SSD—Facilities ManagementSSD—FinanceSSD—ProcurementSSD—Strategic and Business DevelopmentSSD Executive TeamSSD Human ResourcesSTG Finance Team Division 10 35 10 4 7 2 11 1 43 42 7 2 1 4 3 5 15 3 2 1 3 4 2 2 1 1 1 2 3 2 1 1 62 1 11 2 1 14 5 53 70 13 15 cer Information Management Division 5 5 15 14 5 5 1 1 51 cer Total Y Y RLA Directorate Climate Change Adaptation 3 2 1 1 1 8 Natural Environment Group Directorate Total RLA Directorate Total Water DirectorateWildlife & Countryside Directorate Chemicals & Nanotechnologies Environmental Land Management Division 1 2 2 7 2 8 5 4 6 6 3 1 1 28 19 Water Directorate Total Wildlife & Countryside Directorate Total Chief Information O Finance, Planning and Resource Directorate Total Renewing Defra Programme Directorate Total Finance, Planning and Resource DirectorateEstate DirectorateEstate DG Directorate Finance Total Estates—Division 1 2 1 1 8 3 4 4 8 1 1 26 Shared Services DirectorateSTG Finance Team SSD—Customer Services STG Director General Division 14 25 9 5 4 1 1 1 58 1 3 Shared Services Directorate Total in Post (Full time equivalents)—31 March 2008 Annex A V Defra Sta Group Directorate Division AA AO EO HEO SEO G7 G6 SCS Total Natural Environment Group Total Finance and Commercial Group Chief Information O Renew Defra GroupRenew Defra Group Total Renewing Defra Programme Directorate Renewing Defra Programme 2 4 6 7 5 3 1 27 Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 140 Environment, Food and Rural Affairs Committee: Evidence 11 22 11 25152217 3715391441 352212216 568891440 3 33 65 109 40 61 13 23 337 1231163113 112273417136 21323471125311116 1141 29 69 457 486 742 351 484 142 152 2,871 25 180 120 70 68 51 18 16 548 ce 12964 22 Y Royal Commission on Environmental PollutionScD Head of Directorate 2 1 3Delivery Relationship Team Division 1 2 1 10 2 2 10 3 5 1 23 Science Policy Division 1 2 2 1 6 1 13 Local and Regional Government DivisionStrategy UnitSustainable Development Commission SecretariatSustainable Development UnitCD Citizen & Public EngagementCD Corporate CommunicationsCD DEFRA Internal CommunicationsCD Defra Press O CD Director Business Support CD Strategic MarketingCommunications Projects 3 11 1 19 4 3 4 2 2 9 1 12 3 4 2 4 1 7 2 4 8 1 50 1 3 5 1 10 1 4 6 2 1 2 1 31 1 3 2 20 3 2 1 9 1 19 STG Finance Team Total Customer Focus Directorate Total Central Analytical Directorate Total Science DirectorateStrategy & Evidence GroupStrategy & Evidence Group Total CSA/SAC Secretariats Division SEG Group Level DivisionCommunications Directorate Total Customer Focus Directorate Better Regulation 2 Division 1 3 1 3 4 6 1 1 1 1 16 5 2 5 9 4 1 3 19 Science Directorate Total Strategy And Sustainable Development Directorate European Union and International Co-ordination Division 3 1 7 1 3 1 16 Strategy And Sustainable Development Directorate Total Communications Directorate CD Central Communications Unit 1 11 16 11 7 2 1 48 in Post (Full time equivalents)—31 March 2008 Annex A V Defra Sta Group Directorate Division AA AO EO HEO SEO G7 G6 SCS Total Finance and Commercial Group Total Strategy & Evidence Group Total Strategy & Evidence Group DG Central Analytical Directorate Central Analytical DivisionGrand Total 2 5 1 5 2 2 17 Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 141 Annex B 0.0 0.0 0.0 0.0 0.0 0.0 Measure Quality maintained Likely to May Will not Methodology agreed, including Million 276.0 262.5 262.5347.2 248.4 0.0 248.8 0.0126.1 0.0 0.0 118.2 0.0 263.0 118.2 262.5 0.0 0.0 248.4 0.0 0.0 248.4 262.5 0.0 0.0 0.0 118.2 248.4 118.2 0.0 0.0 0.0 0.0 118.2 0.0 262.5 0.0 13.0 0.0 248.4 115.4 0.0 134.1 0.0 0.0 118.2 0.0 248.4 0.0 0.0 118.2 Mar 08 Mar 08 Yes No change change change Yes No Yes No Prelimenary Interim Final Partial Substantial Full ciency Y ciency Y Estates London—Corporate Transforming HR—Corporate Programme—PFR; Corporate Services; Procurement; DEFRA0201: Waste DEFRA0301: E England Rural Development Contracting; Procurement— Executive Agencies E Programmes—PFR; Procurement; D: E-nabling Programme— Policy Centre Review Programme part of the Departmental Reform FPRD Change Programme incl. Procure to Pay and FIP—Corporate Removed from Programme Rural Payments Agency Change QUARTERLY REPORTING SCHEDULE—DATA CLASSIFICATION Department DefraTarget £610mQuarter reported Q4 2007–08 Q4 2007–08 Defra 610 DEFRA0111DEFRA0112 Services ServicesDEFRA0301 Transactions; Productive Time 2.5 4.8 2.5 126.1 3.4 2.5 118.2 3.4 118.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 118.2 3.4 2.5 118.2 3.4 0.0 0.0 0.0 118.2 2.5 3.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 118.2 0.0 2.5 0.0 3.4 0.0 0.0 0.0 0.0 118.2 0.0 2.5 3.4 DEFRA0201 Implementation—Procurement 347.2 248.4 248.8 0.0 0.0 0.0 248.4 248.4 0.0 248.4 0.0 0.0 0.0 248.4 0.0 0.0 248.4 DEFRA0103DEFRA0104 Programme—IT.—PFR Procurement 25.4 16.0 16.0 100.6 0.0 99.4 0.0 99.4 0.0 0.0 16.0 0.0 16.0 0.0 0.0 99.9 16.0 99.4 0.0 0.0 99.4 0.0 0.0 0.0 16.0 0.0 0.0 0.0 99.4 16.0 0.0 0.0 99.4 0.0 DEFRA0102 Activity Baseline Review—PFR 43.3 43.3 43.3 0.0 0.0 0.0 43.3 43.3 0.0 43.3 0.0 0.0 0.0 43.3 0.0 0.0 43.3 DEFRA0105DEFRA0106DEFRA0107 Corporate Services Modernising Rural Delivery—PFRDEFRA0108 Corporate Services 14.0DEFRA0109 Programme—PFR 13.0DEFRA0110 Services 51.3 13.0 Catalyst—Corporate Services 51.3 0.0 21.6 51.3 21.6 0.0 4.9 0.0 0.0 21.6 0.0 4.9 0.0 0.0 13.0 4.9 7.6 0.0 13.0 0.0 0.0 51.3 7.1 0.0 0.0 0.0 51.3 13.0 21.6 7.1 0.0 0.0 21.6 0.0 0.0 4.9 51.3 0.0 0.0 0.0 4.9 0.0 21.6 0.0 0.0 0.0 0.0 7.1 0.0 13.0 4.9 7.1 0.0 13.0 0.0 0.0 51.3 0.0 0.0 0.0 0.0 21.6 0.0 7.1 0.0 0.0 0.0 0.0 0.0 4.9 51.3 0.0 0.0 0.0 21.6 0.0 0.0 7.1 4.9 0.0 0.0 7.1 DEFRA0101 Programme—PFR; Transactions 0.0 Initiative Ref Initiative Title Forecast Actual baselines Data maturity Quality Data classiﬁcation Data systems assurance Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 142 Environment, Food and Rural Affairs Committee: Evidence 0.0 0.0 0.0 Title: Date: Measure Quality maintained Print Name Signature Likely to May Will not Methodology agreed, including ciency Programme 7.2 7.2 7.2 0.0 0.0 0.0 7.2 7.2 0.0 9.8 0.0 0.0 0.0 7.2 0.0 0.0 7.2 ciency Gains” has been 27.4 24.3 24.3 0.0 0.0 0.0 24.3 24.3 0.0 24.3 0.0 0.0 0.0 24.3 0.0 0.0 24.3 Y Y Mar 08 Mar 08 Yes No change change change Yes No Yes No Prelimenary Interim Final Partial Substantial Full SR04 E V ! DEFRA0601: Animal Health (State Total 783.9 660.6 661.0 0.0 0.0 0.0 661.1 660.6 0.0 663.2 0.0 0.0 0.0 660.6 13.0 115.4 532.2 DEFRA0501: Lyons Relocation DEFRA0402a: Corporate Centre— DEFRA0402c Renew DEFRA (07/ DEFRA0403 Animal Health and DEFRA0401: Other Projects; Programmes—Corporate Services; PFR; Procurement undertaken and the figures containedreflection herein of represent the a current fair status of Defra’s E I certify that a selfOGC’s assesssment Guidance against for the “Signing-o principles outlined in DEFRA0601 Veterinary Service) 7.2 7.2 7.2 0.0 0.0 7.2 7.2 0.0 9.8 0.0 0.0 0.0 7.2 0.0 0.0 7.2 DEFRA0501 Programme DEFRA0402aDEFRA0402c AnalyticalDEFRA0403 08) Welfare—Wildlife Unit 2.5 0.7 2.5 0.7 8.2 2.5 0.7 8.2 0.0 0.0 8.2 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.7 0.0 2.5 0.7 8.2 0.0 0.0 8.2 2.5 0.7 0.0 0.0 0.0 8.2 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.7 0.0 0.0 0.0 8.2 0.0 0.0 0.0 2.5 0.7 0.0 8.2 DEFRA0401 CONTINGENCY 16.0 12.9 12.9 0.0 0.0 0.0 12.9 12.9 0.0 12.9 0.0 0.0 0.0 12.9 0.0 0.0 12.9 Initiative Ref Initiative Title Forecast Actual baselines Data maturity Quality Data classification Data systems assurance Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 143 ciencies Y r 2007/ e Annex C V Completion of streamlining and refocussing Defra HQ policy function. Distribution). COE project delivering. Procurement Project Mgmt Ongoing over 3 years. Further implementation of the Delivery Strategy:· DWI to EA/FSA· Flood Strategy scheme to EA· Marine Licensing Agency established. Milestones will be added oncefrom results pilots are known. contract. from pilots are known. realised including 15-20 SCS posts Supplier Mgmt project delivering. SupplierProcurement Mgmt Project project Mgmt delivering. Ongoing Procurement Project Mgmt Ongoing Supplier Mgmt project delivering. 610 Defra Q4 update—Dec 07 status Milestones March 08 Mar 08 £m Forecast £m Actual Update—add new milestones if required ciency Programmes—PFR; of savings. 08—preliminary data Y Procurement; Corporate Services E Transactions Review—PFR Mar’08. DG NRRA OonaMuirhead Andrew Robinson Chris Chant RayBoguslawski DEFRA0107Ursula Brennan DEFRA0108 DEFRA0107: Delivery—PFR E-nabling Programme— DEFRA0108: Policy Centre Review 21.6 Corporate Services 4.9 21.6 4.9 Third annual review of e-nabling Milestones to be added once results Mar 08—further 139 sta Ursula Brennan DEFRA0106 DEFRA0106: Modernising Rural 14.0 13.0 Various DEFRA0105 DEFRA0105: Executive Agencies 51.3 51.3 Agencies returns provide evidence Progress data for Q2 2006-07 Conﬁrmation of savings fo Record of Milestone Forecasts and Actuals DEPARTMENT Mark AddisonSimon Vry DEFRA0101N K DEFRA0101: Rural Payments AgencyJohn AdamsHead of RuralDelivery Service DEFRA0103 0.0 DEFRA0102David RabeyKevin Bates DEFRA0103: England DEFRA0104 Rural DEFRA0102: Change Activity Programme—PFR; Baseline 0.0 DEFRA0104: Contracting; Development Programme—IT.—PFR 43.3 25.4 Procurement—Procurement 100.6 43.3 16.0 The £43.3m will be 99.4 delivered in The COE £43.3m project will delivering. be delivered in Mar’08. *COE project delivering. Category Mgmt (FM; Post and TARGET QUARTER REPORTED Q4 2007/08 SRO Initiative Initiative Title Sep ‘07 Dec ‘07 March ‘08 Jim SmellieProgrammeDirector Programme part of Reform the Programme—PFR Departmental Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 144 Environment, Food and Rural Affairs Committee: Evidence c Statement Y c Reporting. ODPM Y ciency savings report for Q2 2007/08 Y 07-08 Mid Year Reporting E Allowance Trading Scheme completed. ODPM 06-07 E ciencies of £2.2 m have Y ciency savings report for Q1 Est of systems and procedures to Conﬁrmation of savings for 2007/ ciency savings have been Y Y reported for the last quarter. Q4 update—Dec 07 status Milestones March 08 Mar 08 £m Forecast £m Actual ciency Programme— 126.1 118.2 E Y PFR, Corporate Services;procurement;Transactions; ProductiveTime 2007/08. engineering. support Business Process Re- 08—preliminary data Procurement Analytical Corporate Services Veterinary Service) been reported Welfare—Wildlife Unit programme- corporate services; PFR; Procurement DEFRA0301 DEFRA0301: E DEFRA0402a DEFRA0402a Corporate Centre— 0.7 0.7 DEFRA0402c DEFRA0402c Renew DEFRA (07/08) 8.2 8.2 E DEFRA0201 DEFRA0201: Waste Implementation— 347.0 245.2 Review of the operation of the Landﬁll ODPM 08-09 E Total 783.7 657.4 DEFRA0403 DEFRA0403 Animal Health and 2.5 2.5 DEFRA0401 DEFRA0401: Other Projects;DEFRA0601 DEFRA0601: Animal Health (State 16.0 7.2 12.9 7.2 Financial e Ian GrattidgeFPRD ChangeProgramme DEFRA0109Roger Atkinson Procure 2 Pay DEFRA0109: FPRDMike Change Watkins DEFRA0111Richard AllenJen Challinor DEFRA0112 DEFRA0111: Estates Programme London— incl. Procure to Pay and 7.6 FIP—Corporate DEFRA0112: Services Transforming HR— 2.5 7.1 4.8 Corporate Services 2.5 3.4 SRO Initiative Initiative Title Sep ‘07 Dec ‘07 March ‘08 Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 145 Update 4 .4 99.4 Annex D 4 248.4 248.4 248.4 248.4 ep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 ACTUAL Update ciency Gains Y E £m Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 S 188.7 0.0 15.5 19.8 25.3 33.6 54.7 60.9 71.2 111.4 127.8 139.8 182.1 207.0 274.1 0.0 30.7 18.1 24.4 32.0 62.2 90.5 114.8 130.2 140.1 156.3 203.0 213.2 185.5 0.0 54.3 54.3 86.3 86.3 151.0 151.0 151.0 151.0 248.4 248.4 248.4 248.4 347.0 0.0 54.3 54.3 86.3 86.3 151.0 151.0 184.6 184.6 248.4 248.4 248.4 248. Update FORECAST Savings ciency 93.2 0.0 26.2 36.0 41.0 48.0 56.2 62.0 68.0 86.0 93.1 97.0 105.2 115.0 126.1 0.0 26.2 37.2 47.2 47.2 56.2 62.2 78.1 85.9 91.1 108.7 114.1 114.1 118.2 Y ciency Y Procurement—Procurement DEFRA0105a: ExecutiveAgencies E 41.0 0.0 3.0 4.0 5.0 5.9 8.7 9.1 10.3 12.6 14.2 15.7 42.0 42.0 51.3 0.0 3.0 3.9 6.1 6.1 10.2 11.3 18.1 19.5 27.1 37.7 42.0 51.2 51.3 QUARTERLY REPORTING SCHEDULE Record of Forecasts and Actuals DEFRA0102: ActivityBaseline Review—PFR DEFRA0103a: England RuralDevelopment Programme— IT.—PFR DEFRA0104: 0.0 Contracting; 2.0 0.0 0.0 99.4 0.0 2.0 0.0 0.5 2.0 10.6 0.9 2.0 6.6 1.5 2.0 9.1 1.9 2.9 13.6 4.6 2.0 20.8 9.2 2.0 23.0 13.8 26.0 2.0 14.9 58.0 3.3 15.4 65.0 3.3 19.0 73.0 22.0 3.3 82.0 99.4 25.4 3.3 100.6 0.0 43.3 0.0 8.6 0.0 10.6 0.5 2.0 5.5 0.9 2.0 8.9 1.5 2.0 12.7 1.9 2.0 23.0 45.2 4.6 2.0 51.0 9.2 2.0 58.0 13.8 2.0 56.0 14.9 2.0 59.7 16.0 99.4 2.0 16.0 99 16.0 2.0 16.0 2.0 2.0 43.3 DEPARTMENTTARGETQUARTER REPORTED Q4 07/08 DEFRA 609.0 Programmes—PFR; Procurement; Corporate Services DEFRA0106a: ModernisingRural Delivery—PFR DEFRA0107: E-nablingProgramme—Corporate 13.0Services 0.0DEFRA0108a: Policy CentreReview Programme part of 21.6 0.0the Departmental Reform Programme—PFR 0.0 4.3 0.8DEFRA0109a: FPRDChange Programme incl. 0.0 0.0 1.5Procure to Pay and FIP— Corporate Services 3.8 0.0 3.4DEFRA0111: EstatesLondon—Corporate Services 3.8 0.0 5.3 2.2DEFRA0112a: Transforming 3.8HR—Corporate 0.0 Services 6.6 0.0 3.8 0.0 7.7 0.0 2.7 2.5 3.8 1.0 8.8 0.5 0.0 0.0 10.3 3.8 2.6 1.4 0.0 0.0 12.0 3.8 2.6 1.7 1.6 0.0 12.0 3.8 2.6 3.0 1.6 13.0 0.0 3.8 4.9 2.6 1.6 14.0 0.0 6.0 4.9 2.9 4.8 0.0 2.5 8.5 4.9 3.1 4.1 0.0 2.5 21.6 4.9 4.1 4.1 0.0 2.5 0.0 4.4 4.1 4.9 0.0 2.5 3.8 5.6 4.8 0.0 0.0 2.5 3.8 6.6 4.8 0.0 5.7 2.5 3.8 4.8 0.0 6.6 2.5 7.1 3.8 4.8 0.0 8.0 2.5 0.0 8.9 0.0 9.1 1.2 3.4 2.5 10.9 10.3 1.0 0.8 0.0 11.4 0.0 11.0 1.0 11.4 1.1 1.6 0.0 12.0 12.6 4.3 1.8 1.6 13.0 0.0 12.6 4.3 13.0 2.7 1.6 0.0 14.3 4.9 2.6 1.6 2.5 14.3 4.9 5.0 21.6 4.5 2.5 4.9 6.2 3.8 2.5 4.9 6.5 3.4 2.5 4.9 6.5 3.4 2.5 6.5 3.4 2.5 6.5 3.4 2.5 7.1 3.4 2.5 3.4 2.5 3.4 2.5 DEFRA0201: Waste 185.5 0.0 54.3 54.3 86.3 86.3 151.0 151.0 151.0 151.0 248.4 248.4 248.4 248.4 347.0 0.0 54.3 54.3 86.3 86.3 151.0 151.0 184.6 184.6 248. Implementation— Procurement DEFRA0301: E Programme—PFR; Corporate Services; Procurement; Initiative Title Cashable 04/05 05/06 06/07 07/08 04/05 05/06 06/07 07/08 Processed: 11-07-2008 00:22:24 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 146 Environment, Food and Rural Affairs Committee: Evidence Update 6.3 606.5 ep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 ACTUAL Update Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 S 2.2 0.0 0.0 0.0 0.0 0.0 0.0 1.3 1.7 2.7 3.8 4.1 4.5 6.2 7.2 0.0 0.0 0.0 0.0 0.0 1.0 1.3 2.1 2.1 4.9 7.6 9.8 9.8 93.2 0.0 26.2 36.0 41.0 48.0 56.2 62.017.8 68.0 0.0 86.0 0.4 93.1 97.0 0.4 105.2 0.4 115.0 126.1 0.4 0.0 2.3 26.2 18.2 37.2 22.0 47.2 25.0 47.2 9.0 56.2 14.4 62.2 20.1 78.1 22.6 85.9 27.4 91.1 108.7 0.0 114.1 0.4 114.1 0.4 0.4 0.4 15.0 18.2 7.1 8.2 8.5 14.9 21.0 21.0 487.4 0.0 96.4 110.5 153.0 168.3 264.2 293.4 313.9 376.1 482.1 503.8 560.3 599.2 781.7 0.0 111.6 110.0 158.3 165.9 285.4 323.3 386.7 411.0 493.0 535.9 59 Update FORECAST Savings Transactions; Productive Time DEFRA0401a: OtherProjects; Programmes— Corporate Services; PFR; Procurement DEFRA0402a: CorporateCentre—Analytical 9.6DEFRA0402c: Renew (blank)DEFRA (07/08) 0.0DEFRA0403: Animal Health 0.0and Welfare—Wildlife Unit 0.4 (blank) 0.0 0.4 8.2DEFRA0601: Animal Health 0.0(State 0.0 Veterinary Service) 0.4 0.0 0.0 0.0 2.2 0.4 0.0 0.0 0.0 0.0 2.3 0.0 0.0 0.0 18.2 0.0 0.0 0.0 0.0 22.0 0.0 0.0 0.0 25.0 0.0 0.0 0.0 0.0 9.0 0.0 0.0 0.0 11.0 0.0 0.0 0.0 13.0 0.0 0.0 0.2 15.0 1.3 0.0 0.0 0.3 16.0 1.7 0.0 2.3 0.4 0.0 2.7 1.0 2.5 0.7 0.4 3.8 4.3 2.5 0.0 0.4 4.1 4.7 2.5 0.0 0.4 4.5 8.2 0.0 0.0 0.4 6.2 0.0 0.0 15.0 0.0 7.2 0.0 18.2 0.0 0.0 0.0 0.0 7.1 0.0 0.0 0.0 0.0 8.2 0.0 0.0 0.0 0.0 7.4 0.0 0.0 0.0 0.0 9.6 0.0 0.0 0.0 0.0 9.6 0.0 0.0 1.0 0.0 9.6 0.0 0.7 1.3 12.9 0.0 1.1 0.7 2.1 0.0 2.5 0.7 2.1 2.1 2.5 0.7 4.9 8.2 2.5 7.6 8.2 2.5 9.8 8.2 9.8 7.2 Initiative Title Cashable 04/05 05/06 06/07 07/08 04/05 05/06 06/07 07/08 Processed: 11-07-2008 00:22:25 Page Layout: CWMEM1 [O] PPSysB Job: 379090 Unit: PAG2

Environment, Food and Rural Affairs Committee: Evidence Ev 147 Annex E ciency Subgroup validates returns ciency Programme Account ciency Programme Account ciency Programme Account ciency Programme Account ciency Programme Account ciency Programme Account ciency Programme Account Y Y Y Y Y Y Y Y E V ciency index. Corporate Y HMT. E PSA trajectories. ectiveness V ectiveness of V satisfaction with workplace; Corporate and local BSC’s. Sta V meeting HMT deadlines faster. Prompt payment targets met. Reduced error rate for payments. of IT Services, current Balanced Scorecard. Strategic Outcomes.indicators. Corporate Balanced Scorecard. Manager checks the data satisfaction survey researchmilestones met. E delivery bodies—BSC measure annual report. marker which includesbenchmarked figures for costs ofapplications, developments andoperational services. E BSC. Fixed Rate Card for application development costs. Marker e PSA reporting Q4 Q4 How is balancing quality evidenced? Source of evidence Verification undertaken by department Verification undertaken by OGC Mar ‘08 Mar 07 Forecast Actual ciency 51.3 51.3 Standards specified in service level Outcome of customer satisfaction Performance against Ministerial Y Procure to Pay and FIP—Corporate Services Improved quality and timeliness of online system statistics. management information, inc. Manager checks the data part of the Departmental ReformProgramme—PFR to be met. Scorecard. PSA delivery reports to Manager checks the data. Workforce Services environment. surveys. Manager checks the data Programme—IT.—PFRProcurementProgrammes—PFR; Procurement;Corporate ServicesPFR DefraCorporate PSA Services target 3, both agreements maintained. Quality survey. Performance against PSA target reporting services. Average savings per Targets buyer. announced in standards performance annual based reports. report on customer Manager checks Ministerial the Targets data. announced in and subject Manager to checks audit. the data industry-wide Quality service Industry standard Quality service Manager checks the data DEFRA0111 Estates London—Corporate 2.5 2.5 Sta DEFRA0109 FPRD Change Programme incl. 7.6 7.1 Higher levels of matched invoices. Matched; unmatched ratio from E DEFRA0108 Policy Centre Review Programme 4.9 4.9 Trajectories in PSA targets continue Defra Corporate Balanced E DEPARTMENTTARGET QUARTER REPORTED Q407/08 DEFRA DEFRA0103 England Rural DevelopmentDEFRA0104 Contracting; Procurement—DEFRA0105 25.4 Executive Agencies E 100.6 16.0DEFRA0106 Customer satisfaction for 99.4 RDS. Modernising RuralDEFRA0107 Delivery— Fit for Customer purpose satisfaction products surveys. and D: E-nabling Programme— E 14.0 Customer satisfaction reports. PCD E 13.0 21.6 PSA Target 3, both indicators 21.6 These PSA are target measured reporting against an Customer satisfaction surveys. E PSA reporting Initiative Ref Initiative TitleDEFRA0102 Activity Baseline Review—PFR 43.3 £m 43.3 Achievement of PSA targets and £m Annual report and accounts. E Assessment of Balancing Quality Measures Processed: 11-07-2008 00:22:25 Page Layout: CWMEM1 [E] PPSysB Job: 379090 Unit: PAG2

Ev 148 Environment, Food and Rural Affairs Committee: Evidence

Printed in the United Kingdom by The Stationery OYce Limited 7/2008 379090 19585 ciency Account Y ciency Programme Account ciency Programme Account ciency Programme Account ciency Programme Account Y Y Y Y Manager checks the data Manager checks the data Manager. Manager checks the data /to verification be aligned with otherthat metrics source for of contingency report from Department and Agencies ce requirements. Right people; Y Customer satisfaction surveys andKPI’s many of which E-HR areo system. Cabinet right skills; right job. sources audited by AuditCommission Municipal WasteManagement Survey. Scorecard. Best Value Performance other data. Defra Balanced Indicators. scrutiny 7.2 7.2 Q4 Q4 How is balancing quality evidenced? Source of evidence Verification undertaken by department Verification undertaken by OGC 27.4 24.3 126.1 118.2 276.0 262.5 347.0 245.2 Mar ‘08 Mar 07 Forecast Actual ! ciency 126.1 118.2 Environment Agency Corporate Environment Agency Corporate Performance data subject to EA audit Y (State Vetinary Service) Total 783.7 657.4 Welfare—Wildlife Unit Services; Procurement; Transactions; Productive Time Programmes—Corporate Services; PFR; Procurement CONTINGENCY Centre—Analytical (07/08) Programme—PFR; Corporate Balanced Scorecard Measures Balanced Scorecard and checked by E Implementation—Procurement Directive—2010,BVPI 1999. Data Quality Survey of England and LA audit and Audit Commission Services Benefit Realisation plans inc. Corporate and local BSC measures. Manager checks the data DEFRA0601 DEFRA0601: Animal Health 7.2 7.2 Level of service maintained. E DEFRA 0403 DEFRA0403 Animal Health and 2.5 2.5 PSA Target E DEFRA0402a DEFRA0402a CorportaeDEFRA0402c DEFRA0402c Renew DEFRA 0.7 8.2 0.7 8.2 To be identified Delivery of PSA’s PSA reporting, Departmental Reported data based on ONS returns DEFRA0401 DEFRA0401: Other Projects; 16.0 12.9 Quality metrics under development. Defra Balanced Scorecard E DEFRA0201 DEFRA0201: WasteDEFRA0301 DEFRA0301: E 347.0 245.2 Meeting targets for EU Landfill AES returns, Local Environmental Data presented in AESs is subject to Initiative Ref Initiative TitleDEFRA0112 Transforming HR—Corporate 4.8 £m 3.4 Measures as set out £m in T-HR Customer satisfaction surveys. E