There can be few people in Scotland who do not know of the chaotic, wildly expensive and uncompleted mess of a new IT system the Scottish Government is introducing to manage the annual EU Common Agriculture Policy [CAP] farm subsidy payments to Scotland’s eligible farmers and crofters.
These payments are largely funded by the EU but one of CAP’s two central elements – rural development – is jointly funded by the Scottish Government.
The Scottish Government’s failing new system is called the CAP Futures programme.
Yesterday, 19th May 2016, the national audit commission, Audit Scotland – which had earlier and formally reported on very serious concerns about the state of the project, published its update on that report – on the current state of play and its projections for the programme’s direction of travel to completion.
A report into a public sector operation has rarely been so unequivocally and comprehensively damning.
The fourth and last point of the summary of the report outlines a picture of the appalling incompetence of all kinds and at all levels, showing absolute disregard of the need for having and observing appropriate procedures and controls on major procurement projects. It is worth reproducing here in full to reinforce what a parochially ineffectual and irresponsible mess this hugely expensive programmes has been – and remains:
4: ‘Programme governance has not been effective. Significant decisions were made outwith programme governance structures; strategic decisions took too long; and senior roles and responsibilities overlapped and did not operate as intended. The programme team and IT division also did not work as one team, with a lack of trust and blame culture hindering effective progress. There has been little accountability in the programme for IT delivery leading to ineffective challenge and oversight. Management failed to deal effectively with conflicts of interest; actions were taken but these were inadequate and arrangements were not sufficient to ensure value for money.’
- the project is heading way over budget – to an estimated £178 Million from an original budget of £102 Million;
- it has already spent £126 Million of that £178 Million;
- to try to keep within the expanded budget, the scope and ambition of the project has been reduced to achieving no more than simple compliance with the EU’s basic requirements;
- it shows no reliable sign of being completed even to that floor level by the EU deadline of 30th June 2016;
- if it is not completed by then and has not processed the due payments by then, the EU may legitimately impose financial penalies upon Scotland for this failure – penalties amounting to anything between £40 Million and £125 Million;
by March this year, 2016, the Scottish Government had already incurred around €69 Million [about £51 million] in ‘disallowances’ [penalties} for a number of failures in the previous CAP. This amounts to one per cent of the total CAP payments made in Scotland between 2006 and 2013;
- 20% of the current payments due to farmers and crofters remain unpaid;
- the Scottish Government has assessed as ‘extreme’ the risk of not completing by 30th June 2106;
the Scottish Government has not completed a detailed assessment of the risk of incurring EU financial penalties to use to support its decisions on tailoring the scope of the project;
- the Scottish Government’s very belated emergency action to lend funds from the Scottish budget to unpaid farmers while
claims are being processed, is, according to Audit Scotland, putting the Scottish Government budget ‘at risk through duplicated or over-payments and through delays to other state spending if the loans are not repaid when expected’;
- there was no competent management and there were no competent controls of the project, with the necessary skills levels for staff unassessed and unmet;
- the Audit Commission ‘does not expect the programme to deliver value for money.
This last judgment is very serious when one remembers that the mantra for government is to achieve ‘best value’ in procurements – and Audit Scotland does not expect this project even to deliver ‘value for money’.
What the Audit Scotland report says – added to its citing of the Scottish Government’s own assessment of an ‘extreme’ risk of not meeting the EU project completion deadline of 30th June 2016- indicates that the expectation is that the Scottish Government will be facing stringent financial penalties for failure to deliver this basic requirement.
The decoy response tactic
The Scottish Government’s tactic in dealing with this fundamentally swingeing criticism of governmental competence from the nation’s auditors has been to go for a decoy – to focus on an immaterial but high profile matter in the hope that the media will chase after that and ignore the deeper implications of the substance of the report.
Through Deputy First Minister, John Swinney, they are focusing on the media-led story of a contractor who was part of the ‘management structure’ [we use the term loosely] of the project, whose own business was given parts of the work involved – with a markedly positive impact on his company’s financial performance.
This is no more than part of the fabric of what has been a profoundly ill-managed and ill-monitored exercise. Such acts of opportunism – and the tacit acceptance of them, even the facilitation of them – are, sadly, pretty commonplace in politics and in governmental procurements. This is one of the areas of culturally endemic corruption that largely stays below the radar but which any genuinely reforming government would swiftly address.
The real issue here is the almost absolute systemic failure revealed in the prolonged collapse of this project.
If this is the nature of competence, management and internal scrutiny in one department of government and under one Cabinet Secretary, it is unlikely that any other department will be any better.
It also ought not to be forgotten that, until this incident, the responsible Rural Affairs Secretary, Richard Lochhead, had been notably more capable in office than most of his colleagues.
With the Scottish Government now moving to take responsibility for a very challenging spectrum of new tax and welfare functions, the angle of the learning curve and the risk of potential serious failures would appear to be substantial.
Neither First Minister, Nicola Sturgeon nor her Deputy, Finance Secretary, John Swinney, come out of this well.
The 2014 Audit Scotland report on this programme was a serious qualified warning on the state of this project and one commanding immediate regard.
From then on, this same Cabinet Secretary, the team of Scottish civil servants working on the project and the entire management of the project ought to have been on the highest priority alert to the highest level of government.
This clearly was not the case.
In this latest report, Audit Scotland notes that their August 2012 report on Managing ICT Contracts in Central Government – updated in June 2015, ‘we made a series of recommendations on managing ICT programmes. These included:
- establishing effective governance and risk management arrangements and complying with them;
- ensuring appropriate skills and understanding of relevant project management frameworks are in place;
- developing robust performance management arrangements;
- completing detailed skills assessments at the start of the programme;
- clearly defining benefits at the start of a programme, and subsequent monitoring;
- ensuring the programme has required contract and supplier management skills.
It does not appear that the Scottish Government has paid much attention to these recommendations in the progress of the catastrophic failure of the CAP Futures programme.
Shaming too is the common sense advice Audit Scotland in this current report, has found it necessary to supply to the government for immediate implementation in last stages of this project:
- complete a detailed assessment of the risk of financial penalties for all the remaining elements of programme scope, to enable informed decisions on prioritisation if the remaining budget cannot cover all the elements required for CAP compliance
- ensure there are appropriate governance arrangements for all decisions made concerning the programme and payments to farmers
- develop a clear plan for the transfer of knowledge and expertise from the programme staff to staff in the business
- develop and test a disaster recovery solution covering the whole IT system.
New Rural Affairs Secretary and old SNP hand, Fergus Ewing, is stepping into one almighty mess of the most testing proportions; and the First Minister and her Deputy have serious questions to answer on their own contributions by omission to this failure..
Note: The full Audit Scotland report is available on line here: Common Agricultural Policy Futures Programme: an update.
We recommend its reading. It is short, concise and admirably readable.