‘Slap in face’ for farmers facing high interest rate

EXCLUSIVE: Hardship payments may carry sting in the tail for some

Farmers have been dealt a “slap in the face” by plans to charge them extortionate interest on emergency loans they only took out because of Scottish Government bungling.

The handing out of EU subsidies to farmers hasbeen racked by-delays which have threatened to plunge the industry into crisis.

A failed £178 million IT system is at the heart of the fiasco, forcing the SNP administration to pledge a £200m pot for cash advances to stave off a full-scale rural revolt.

But those farmers whose hardship payments end up exceeding the sum they are entitled to under the Common Agricultural Policy will have to stump up the difference – with interest eight times higher than the UK base rate.

Tavish Scott, the Liberal Democrats’ agriculture spokesman, said: “This is another slap in the face for farmers who have already been left out of pocket by the utter failure of the SNP to get to grips with the CAP payment fiasco.

“Farmers and crofters have already paid dearly for the Scottish Government’s IT shambles.

“Now they have been told that they could face interest payments on a scheme that would not have been necessary if Richard Lochhead had done his job in the first place.

“Payments have been delayed and delayed again, some businesses have had to renegotiate lending terms with their banks and now farms face the prospect of paying again for SNP incompetence.”

Last month the Government said any farmers and crofters who have not yet received their first instalment of the CAP by the end of March will receive a cash advance worth 80% of their entitlement. Under the National Basic Payments Support Scheme, farmers who have been overpaid will have to pay interest of 4.2% on repayments.

Interest will only be charged seven days after the CAP payment is made, but farmers say they are unlikely to have cash lying around to make repayments within a week.

Farmers who get £20,000 in CAP payments and are overpaid by £3,000 could face an initial bill of at least £166.

Scott Walker, chief executive of the National Farmers Union Scotland, said it was unlikely farmers would be overpaid in the first place – but slammed the principle of punishing farmers for the Government’s mistakes.

“Should this theoretical possibility occur then we believe it is wrong that anyone should be penalised by what has been mismanagement of a flawed IT delivery system,” he added.

A Scottish Government spokeswoman said the scheme has been designed so the basic payment under CAP is more than the cash advance under the support scheme.

If the reverse is true the “claimant will have to repay the difference between the two amounts,” she said.

“In such cases, if a claimant repays the balance within seven days, no interest will be charged. Interest at 4.24% on the difference, will be charged from seven days after CAP BPS (basic payment scheme) and Greening payment is made,” she added.

Rural Affairs Secretary Richard Lochhead has found himself presiding over a crisis caused by the catastrophic failure of the £178m IT system.