Environment, Food and Rural Affairs Committee

Session 2006-07

23 February 2007


23 February 2007

Select Committee blames DEFRA financial mismanagement for budget cuts

The Environment, Food and Rural Affairs Committee has blamed financial mismanagement for a £200 million deficit in the annual Defra budget.

In its report, Defra's Departmental Report 2006 and Defra's budget, the Committee recognised that some factors such as the Spring 2006 avian influenza outbreak were beyond the Department's control but said that the Department itself has to take much of the blame for its precarious financial situation.

Among its criticisms the Committee found the Department had been "careless" and "over-optimistic" about the amount of money it would receive from the Treasury. On top of this error, additional costs such as the Rural Payments Agency debacle and the Spring 2006 avian influenza outbreak were enough to "tip the balance", said the Committee.

The result was sudden, unplanned, poorly explained and highly disruptive mid-year restrictions on the budgets of agencies, public bodies and voluntary groups reliant on Defra funding. This, in turn, led to important environmental programmes and projects being postponed.

Among those affected is the Environment Agency which told the Committee that budget restrictions would increase the risk of flooding and could lead to an escalation in pollution incidents. British Waterways too has had to postpone major works and repairs.

The Committee is extremely concerned that funding will continue to be very tight for the Department and its agencies over the next few years. It calls for spending priorities to be published as soon as possible to show how further efficiency savings will be met. The Department is unlikely to meet its target to shed 2,400 jobs by 2008.

More widely, the Committee says that Defra's clout to influence other Government departments on a number of issues remains limited, and that this is especially relevant for climate change issues.

However, the Committee did welcome the Department's commitment to improving the rigour of its approach to biodiversity and related issues.

Overall, the Committee would like to see the Department develop much clearer performance indicators.

Commenting on the Committee's findings, the Chairman, the Rt Hon Michael Jack MP said:

"Our report reveals the shock to Defra's financial systems of having to move from the cosy world of an underspending department to one of tough Treasury rules on departmental financial accountability. It also highlights the need for Defra to write more about what it has achieved and less about ministerial policy aspirations. Tough financial times lie ahead for Defra€”the report confirms that the Department will need to be on top of its financial game if it is to meet all its many obligations from paying farmers on time to reducing their greenhouse gas emissions."

NOTES FOR EDITORS

1. For media inquiries, or to arrange bids for the Chairman and other members of the EFRA Committee, Rt Hon Michael Jack MP, please call Laura Kibby on 07917 488 557.

2. For information about the Committee's inquiry, please call Marek Kubala on 020 7219 1380. The full report, plus written and oral evidence taken in the inquiry, will be available on the Committee's website soon after 00.01 am on 23 February.

3. The Committee took oral evidence twice from Ms Helen Ghosh, Permanent Secretary and Mr Ian Grattidge, Director, Finance, Planning and Resources, Department for Environment, Food and Rural Affairs. Transcripts of these evidence sessions can be found at:

http://www.parliament.uk/parliamentary_committees/environment__food_and_rural_affairs/efra_defra_s_annual_report_2006.cfm