Possibility of massive fines as extension refused

The Scottish Government’s controversial last-minute request for an extension to the farm support payment window has been rejected by Brussels, leaving questions hanging over the possible imposition of multimillion-pound fines.

While the administration was yesterday set to formally request that Europe reconsidered its stance, a Scottish Government spokesperson said it would be “very many months” before it was known whether late payment penalties would apply – and their amount.

Scotland’s Auditor General, Caroline Gardner, has estimated they could be as high as £60 million, in Audit Scotland’s most recent report into the administration’s troubled £178m IT system for support delivery.

But this figure had been described as “speculative” by rural economy secretary Fergus Ewing, who said in a written response to a parliamentary question: “We will not know the precise amount of any late payment penalties that will be applied for many months to come, because these are calculated at UK level in line with EC accounting cycles which, in this case, extend well into 2018.”

He added that the position in relation to penalties

0 Fergus Ewing said a £60m estimate was ‘speculative’ for 2015 was still not finalised, nine months after the extended payment deadline for 2015 payments of 15 October, 2016. When the payment deadline of 30 June was reached, marginally over 90 per cent of the payments had been made in Scotland – short of the 95.24 per cent required by the European Commission. However, with Defra achieving a 99.2 per cent payment rate, Scotland could gain a “get out of jail free” card.

Ewing said that current forecasts from all of the UK paying agencies suggested that there would be no penalties at member state level in relation to the remaining BPS and Greening payments made between 1 July and 15 October.

He said that while these schemes accounted for around 98 per cent Pillar 1 payments, only marginal potential penalties for the Young Farmer and Voluntary Coupled Support schemes remained.

An extension to the payment window was granted to Scotland last year as “an exceptional measure” as it introduced the new payments system.

While the rejection of the call for this year’s extension might be due to the fact that it was not required to avoid fines, Ewing added: “A further request has been made asking the European Commission to reconsider.”

The news comes amidst growing calls for the Scottish Government to commit to another support payment loan scheme which had successfully ensured that the majority of farmers received around 80 per cent of their dues in November before the full gamut of complicated checks on final payments had been completed.