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Farm payment fiasco fine expected Farm payment fiasco fine expected
(about 9 hours later)
Ministers are set for a much larger European Commission fine than expected over the failure to pay farmers in England their subsidies on time. UK taxpayers could face a £300m fine because of the government's failure to pay European subsidies on time to farmers in England.
More than £300m has been set aside by the Department for Environment, Food and Rural Affairs. The environment department, Defra, said it was still negotiating the exact amount with the European Commission.
The figure is more than twice the original penalty estimate. A computer problem at the agency set up to deal with EU subsidies caused delays in payments to thousands of farmers.
Computer problems at the agency set up to administer the EU subsidy scheme resulted in thousands of farmers facing long delays before getting paid. Last month, a former boss of the Rural Payments Agency (RPA) apologised "unreservedly" for the late payments.
Last month, the former boss of the Rural Payments Agency apologised "unreservedly" for its failure to pay out EU subsidies on time. Johnston McNeill, who lost his job over the issue, told MPs in a special secret committee session that the scale of problems with the IT system only became apparent at a very late stage.
'Complete incompetence' New provisions
Johnston McNeill told MPs, in a special secret committee session, the scale of problems with the IT system only became apparent at a very late stage. A Defra spokeswoman said no final decision on the fines had been taken.
The RPA, a government agency, had been charged with allocating about £1.5bn under the EU's single farm payment scheme (SPS). "We have made accounting provision to cover potential financial corrections for payments made to farmers during 2005/06 and 06/07," she said.
The money should have been paid out by February last year, but that deadline was missed - slipping back to June - and more than 500 farmers were still owed money at the end of 2006. These provisions were different from the previous year, when Defra's accounts estimated the fine for only one year, she added.
In December, Environment Minister Lord Rooker told the Lords a further 1,254 had received only an 80% part-payment. The RPA, a government agency, is charged with allocating about £1.5bn each year under the EU's single farm payment scheme (SPS).
The National Union of Farmers blamed "the complete incompetence of Defra and its agencies" for the delays. The money from 2005's allocation should have been paid in early 2006.
But some farmers are still waiting for their payments.
Meanwhile, Environment Secretary David Miliband told the Commons on Thursday that more than £900m of 2006's allocation had now been paid to 77% of claimants.