A culture clash between the Government Digital Service (GDS) and Rural Payments Agency (RPA) was at the heart of problems which dogged a scheme to deliver European Union payments to farmers, the Public Accounts Committee has heard.

The two agencies had originally been expected to spend £155m on designing and implementing a new system to process the more than 100,000 Common Agricultural Policy subsidies handed to farmers in Britain every year.

The government was seeking to make the system more user-friendly for farmers, and reduce the UK’s exposure to late payment fines by the European Commission.

But a report published earlier this month by the National Audit Office (NAO) spending watchdog found that “personal rifts”, frequent leadership changes, and a failure to coordinate the work of the RPA – an agency of the environment department (Defra) – with the Government Digital Service (GDS) team sent in by the Cabinet Office had led to serious problems with the programme, which was overseen by four different Senior Responsible Owners in just three years.

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In March, the department was forced to shelve its online application system, switching to “paper-assisted digital” schemes which have required manual data entry by RPA staff, and the latest estimate of programme costs showed a 40% rise since the original business case was made three years ago.

The tensions at the heart of the programme were laid bare in a Public Accounts Committee session on Wednesday. While Defra’s permanent secretary Claire Moriarty, who succeeded Bronwyn Hill in August, said the department was now “absolutely focused” on improving the system, she acknowledged that the scheme had “lessons for government about capacity and capability”.

“I do accept we haven’t delivered our ambition of a fully digital service from day one,” she said, and acknowledged that changes in the top team had led to “changes of direction and repositioning each time”.

The NAO’s report said Defra had “failed to prevent counterproductive behaviours by senior leaders” working on the project, highlighting what it said were “deep rifts between programme leaders at many stages of the programme’s history”.

At one point in Wednesday’s hearing, NAO boss Amyas Morse was forced to intervene in the testimony of Liam Maxwell – the government’s chief technology officer (pictured above) who was brought in from the GDS to take charge of the programme eight weeks before it launched.

Morse called on both Maxwell and the RPA’s chief Mark Grimshaw – now the programme’s senior responsible owner – to take the report’s findings on the concern of staff about bitter personal relationships more seriously.

“We very rarely indeed write reports that relate to personal behaviour like this,” Morse said.  “This is a most unusual event to have such extensive comment on behaviours which were distressing to staff and visibly confrontational. Just skirting around it with a bit of chat is not going to be good enough. You need to speak to this issue. It’s not good enough to just explain it by saying ‘we cooperated well’. You need to answer the question.”

Maxwell said rifts between the GDS team and RPA staff had been partly a matter of “geography” within the department, with the programme team based “on one floor of the department” while other RPA staff had occupied the rest of the building.

He added: “They were culturally very different. People dressed differently. People used different methods of reporting, much more traditional ways of reporting of management information. The programme itself used modern digital techniques to help report what was going on. 

“And I think people found this very difficult, as a different way of existing or a different way of managing a project.”

But Maxwell defended the role of GDS in trying to make changes to the programme and focus on delivering a fully digital service for farmers. 

“I don’t really want to sound as if I’m being glib by saying I’m from the centre and when someone from the centre turns up it is difficult – but when someone turns up, with that little time to go on a programme which didn’t have a walkthrough product, clearly there were very clear conversations about what we needed to do to fix it.”

“A difference in terms of approach”

Grimshaw admitted that there had been “very much a difference in terms of approach” between RPA staff and the GDS team appointed by the Cabinet Office. And he said there had been no requirement from the European Commission for the scheme to have an “interactive front-end”.

“My focus as the head of the paying agency for the UK has always been on reducing disallowance and providing accurate payments to our customers,” Grimshaw said. “That’s facilitated by having key controls in place at the core of the system. There is no requirement to have a digital front end. Clearly it adds value if you have one.”

Asked by Conservative MP Richard Bacon whether the GDS focus on a digital-by-default system had been a distraction from the RPA’s “important emphasis” on ensuring payments were made on time, Grimshaw replied: “There is that possibility.”

He later added:  “One of the things that I regret about the development of the programme over time was my personal inability to be able to explain the requirements of the programme in terms of the key controls versus any of the ancillary activity, which is a frustration that I still bear. 

“And I’m fairly sure that that would have led to some quite interesting and robust exchanges of comments between Liam and I and other senior people in the programme. But Liam is absolutely right that, at no time, was there a focus on anything other than delivering a successful outcome for customers, for users and for taxpayers.”

PAC chair Meg Hillier asked Defra’s former perm sec Bronywn Hill (pictured, above left) what action she had taken to resolve the “frankly childish spat” between senior staff.

Hill said she had held weekly meetings “to go through the issues” and “get to the bottom of what was driving” the tensions – but admitted she had been “disappointed” with the tone of the relationships.

“I would say that I encouraged people to take a more collaborative approach to their leadership roles,” she added.

“I didn’t want to stifle the tension because we had to get these issues out on the table: what was the right balance between digital innovation and the tight controls of the EU audits. That is a massive tension in this programme – it’s a big challenge and I don’t want to underestimate that. 

“But I was disappointed that the enormous of time, commitment and energy put into by everyone I knew on this programme, was not always reflected in the behaviour of senior leaders.”

In spite of the setbacks identified by this month’s NAO report, the watchdog said that Defra now “making progress” towards its target of having the majority of claims made by farmers processed by the end of the year.

Moriarty, the department’s current perm sec, told MPs that the government had paid 41% of farmers as of December 1.