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Government faces huge fine over subsidy failures

New rural economy secretary Fergus Ewing is under pressure to sort out the mess around delayed subsidy payments for crofters and farmers.
Scottish fisheries secretary Fergus Ewing.

SHETLAND MSP Tavish Scott has called on the Scottish government to “sort out its mess” after a critical Audit Scotland report revealed it could face a fine of up to £125 million for failing to pay agricultural subsidies on time.

The government has come under heavy fire for delays in paying tens of thousands of farmers and crofters basic CAP payments after their new £178 million IT system malfunctioned.

In its latest report published on Thursday, the public spending watchdog said the new computer programme was “unlikely to deliver value for money” and had been plagued by “confused governance”.

It added that the money to pay for its implementation could run out before a European Commission deadline of 30 June, leading to possible fines of between £40 million and £125 million.

Shetland’s MSP has called for an urgent meeting with the new secretary for the rural economy, Fergus Ewing, to seek swift action to resolve the problems.

Ewing replaced former rural affairs secretary Richard Lochhead who stood down from his cabinet position after this month’s election for personal reasons.

“Shetland crofters still do not know what money they have had and when they will receive the final CAP instalment,” Scott said.

“Now Scotland’s independent auditor says the situation is even worse than the Scottish Government admitted.

“Will crofters receive their final instalment before the 30th June deadline? What financial penalties will be imposed and which budget will cough up? How does the new agriculture minister plan to sort out this mess?”

The Conservative and Green parties echoed Scott’s concerns.

NFU Scotland demanded greater accountability and transparency so that “valid concerns…do not slip through the net.”

President Allan Bowie said the “calamitous” payment scheme needed to be “fully functional before money runs out”.

Commenting on the report, auditor general for Scotland Caroline Gardner said the “scale of the challenge ahead” for the government should not be “underestimated”.

“The CAP Futures programme has been beset with difficulties from the start,” she said.

“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.

“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 Commission’s regulations within the programme’s remaining budget.”

In response, deputy first minister John Swinney admitted that the problems with the computer system had been “apparent for some time”.

However he insisted the government had been “dissatisfied by the performance of its private sector providers”.

“As a consequence, the Scottish Government has already put in place stronger commercial arrangements and are making the private contractor fully accountable for the IT delivery elements,” Swinney said.

“We have made progress since Audit Scotland did their work for this report. Around 80 per cent of first instalments have now been paid using the new system, which has been performing well during this year’s Single Application Form window.

“We have also made more than 16,000 nationally-funded payments to farmers and crofters as well as 7,000 support payments to beef producers.”