NICOLA Sturgeon’s new government is facing a £125 million fine if it does not correct shortcomings in an IT system which has hit European payments to thousands of farmers and crofters.
The warning emerges in a report published today by Audit Scotland that criticised attempts so far to sort out the situation and said the European Commission had set a deadline of June 30 to solve the problem or risk the penalty.
It is the latest report by the public spending watchdog on the troubles which have hit the payment scheme, introduced by the Scottish Government four years ago to deliver complex reforms relating to European Common Agricultural Policy (CAP) grants to farmers and rural businesses.
The watchdog’s findings also reveal the CAP Futures programme is now at risk of running out of money because of spiralling costs connected to the IT problems. It said the project’s original budget of £102 million had grown to £178 million.
The report raises concerns that the failings may not be resolved in time to meet the deadline and, if so, the Scottish Government faces a penalty of between £40 million and £125 million from the European Commission.
“The scale of the challenge ahead should not be underestimated. It’s vital that the Scottish Government take steps now to ensure the IT system is fit for purpose and fully assess the potential financial impact if it’s unable to meet the European Commission’s regulations within the programme’s remaining budget,” said Caroline Gardner, Auditor General for Scotland.
“The CAP Futures programme has been beset with difficulties from the start. These problems, and the way they have been dealt with by the Scottish Government, are a serious concern, particularly as the programme continues to face major obstacles and is unlikely to deliver value for money.”
The report found that by the end of last month 77 per cent of basic CAP payments had been issued to 13,915 farmers in Scotland, amounting to £171 million. However, none had been paid in full. “The programme has experienced considerable difficulties, particularly with the slow delivery and poor performance of a new IT system to process support claims. This has caused lengthy delays, missed payment targets,and rising costs,” said the watchdog.
“The delays have had a negative impact on farmers, many of whom were already experiencing financial difficulties caused by low milk prices and severe flooding.”
Scottish Liberal Democrat MSP Mike Rumbles said: “Audit Scotland has uncovered a litany of failure and staggering incompetence dating back two years.
“Meanwhile, no farmers have been fully paid. The IT project is set to run out of money despite its budget already increasing by 75 per cent.”
Earlier this month, it emerged that an £80,000-a-year computing “champion” is to be hired by the Scottish Government to oversee the agricultural payments system.
There are around 67,000 people employed in agriculture in Scotland. Income from farming for 2014 was £688 million.
Last night, Deputy First Minister John Swinney insisted the government’s focus was on getting payments out to farmers ahead of the deadline and he said other parts of the the UK and Europe had experienced similar delays.
Ahead of the publication of the report, Rural Affairs Secretary Richard Lochhead stepped down yesterday.
Fergus Ewing becomes the Rural Economy and Connectivity Secretary. Lochhead cited family reasons for his departure.
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