Meeting of the Parliament 09 March 2016 [Draft]
I am coming to that, because we do not need to look any further than the new information technology system that the cabinet secretary commissioned to operate the new regime. The warnings were there for all to see from the moment that the single application form window for applications opened in March 2015. In fact, we now know that industry experts were issuing warnings about the likely problems in mid-2014, but the Government had other priorities on its mind at that time.
From the outset, those who were trying to use the online application system reported extreme difficulties, describing it as unfit for purpose and totally flawed in many respects. I vividly recall being taken through the process by one agent, and I could only agree with his frustrated assessment that it would have been far better to have reverted to a paper-based application process—something that I would have considered doing—which is what later occurred. That is exactly what the United Kingdom Government did, in an action that was much derided by the cabinet secretary but which resulted—surprise, surprise—in farmers south of the border being furnished with paper forms that were pre-loaded with the previous year’s information, thereby enabling applications and payments to be made on time.
Furthermore, the delay allowed technicians to get on with building a system that I believe is now fit for purpose and ready to receive 2016 applications. That is what I call a sensible plan B, and it appears that the Scottish Government simply did not have one. Every time that the cabinet secretary was challenged about the problems, he repeated that the changes in Scotland were really complex and that staff were working round the clock to overcome the difficulties; that is emphasised again today in his proposed amendment to our motion. I am sure that staff worked hard—I do not doubt that—and that the system was indeed complex. However, I repeat that it was—and still is—a system that was designed, implemented and signed off by the cabinet secretary alone, and the responsibility for that system and its failures rests with him alone.
The IT problems remain to this day. A system that was supposed to cost less than £90 million has already cost more than twice that amount, and is forecast by some to end up costing approximately £300 million. If so, it would represent a staggering amount—between £15,000 and £16,000—for every application that the scheme will process. That is totally unacceptable from the taxpayer’s point of view, and surely it should be totally unacceptable from the Scottish Government’s point of view. Such a shambles cannot just be put down to complexity.
As members may have read in last weekend’s Sunday Times, considerable controversy surrounds the whole IT project, which began back in 2013. The former delivery director is quoted as saying that the blame lies with the “poor work ethic” of the staff and contractors who were in post when he was brought into the project.
Others, including some of the aforementioned staff and contractors, point the finger of blame at that delivery director and his company, Spectromax Solutions, through which 87 new contractors were hired for the project, many of whom—it is alleged—were on tier 2 visa contracts, replacing some of the 180 original staff who had been removed and sidelined from the project.
I have no idea of the rights and wrongs of those assertions and allegations, but I know a subject that merits a full, open and independent inquiry when I see one, and this is surely one such subject. My colleague Mary Scanlon will say more about Audit Scotland’s on-going investigations, but—as our motion suggests—we would strongly support calls for such an inquiry if Audit Scotland’s final report leaves unanswered many of the questions that surround this embarrassing fiasco.
Those questions are for a later debate, but the immediate consequences of the fiasco are too important to leave until later. They demand immediate attention, as the cabinet secretary finally recognised yesterday afternoon. The reality of the failure to pay the first instalment of the basic payment to the majority of claimants by the end of January, as the cabinet secretary had assured the industry would be the case, is a £300 million black hole in the rural economy. That comes against the backdrop of a 15 per cent fall in total farm income in 2015, which in turn follows an 18 per cent drop in 2014.
If we add to that the significant drop in their CAP support payment—more than 50 per cent in some cases—that most farmers in the south and east of the country will experience and are experiencing, we can understand why so many people in the industry remain angry and distressed, despite yesterday’s announcement. Some £300 million is not circulating in the economy as expected and as budgeted for.
I am sure that the cabinet secretary will say that the payment window is open until June, but I remind him that he alone raised the expectation that most farmers would receive their money by the end of January. That expectation has been well and truly dashed. It is also worth pointing out that although some 54 per cent of farmers had received their first instalment by the end of last week, only about 25 per cent of the actual money has been paid out.
An old and established fact has well and truly come to light: if farmers do not have money, they do not spend money. We need only talk to machinery dealers, fencers, drainers, feed merchants and the host of rural businesses that are needed to support the sector and which do so much to feed the rural economy, to realise that farmers are not spending right now. Indeed, not only are they being denied £300 million, but most of that sum is by now, I suspect, having to be borrowed from banks at commercial rates of interest, which adds further costs to the individual businesses involved.
Why does any of that matter? As long ago as 1998, a report by Dr Ronald Wilson, of the University of Edinburgh, highlighted the effectiveness of direct subsidies to farmers as a principle driver of the rural economy. The findings of that report are as relevant today as they were in 1998.