Farm payments move 'may cost £500m'

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A scathing report from the Commons Public Accounts Committee (PAC) accused the Government and its Rural Payments Agency (RPA) of "failing to adhere the basic principles of project implementation" in their haste to have the 2005 single payment scheme ready on time.

As a result, they created "unmanageable" risks and "underestimated the scale of the work needed", the cross-party committee found.

The consequent payment delays caused stress, anxiety and financial hardship, with only 15% of the £1.5 billion due to farmers paid by March 2006, compared with a target of 96%.

At the end of October 2006, 3,000 farmers were still awaiting payments. Some 911 claimants had received nothing and 2,184 were awaiting final "top-ups" when the next year's payments started in 2006.

The RPA is still reviewing a substantial number of claims already processed and making adjustments for under and over payment.

The Department for Environment, Food and Rural Affairs (Defra) spent £122 million in England implementing the EU land area based scheme which replaced production based farm subsidies.

According to the PAC, the Government sought to implement the most complex reform model in the shortest possible time.

Coupled with its refusal to set a minimum claim threshold and the need to accommodate 46,000 newly eligible claimants, this "led to a series of risks which individually would have been severe but collectively were unmanageable," it concluded.

Defra and RPA sought to implement the scheme as part of a wider efficiency programme, which had cost £258 million by March, 2006 but is expected to achieve savings of just £7.5 million by March 2009.