Subsidy fiasco a 'masterclass in bad decision making'

Rural Payments Agency slated by the Public Accounts Committee over computer fiasco

Written by Our parliamentary correspondent

Accountancy Age, 06 Sep 2007

A farm subsidy computer fiasco could end up costing the government close to half a billion pounds, the Commons Public Accounts Committee warned today.

The potential cost of the failure of the Rural Payments Agency to make new subsidy payments based on the land area of farms and smallholdings on time has been spelled out in a report from the committee, which labelled the failure 'a masterclass in bad decision-making'.

Only 15% of farmers received their money on time by March 2006, but by
October some 3,000 were still unpaid. Many were 'stressed and in a financially precarious position' as a result. And problems could continue until next April.

MPs blamed a decision to implement the most complex form of subsidy in too short a time resulting in 'unmanageable risks'. There was insufficient testing of the IT system and agency officials failed to inform senior DEFRA civil servants and ministers as things went wrong.

The agency's chief executive Johnston McNeill was removed - he received £239,000 in pay while on suspension, half-a-year's salary, a lump sum and compensation as well as his pension - but PAC chairman Edward Leigh said DEFRA permanent secretary Sir Brian Bender also 'bears a large part of the responsibility'.

The potential cost is also made up of savings not achieved in the agency, extra staff and a potential EU fine for failing to meet Brussels' deadlines.