‘Disaster plan’ for Richard Lochhead’s £178m farm payments system

Farmers have been warned of extreme risk they will not get their payments by deadline of 30 June. Picture: Jon Savage
Farmers have been warned of extreme risk they will not get their payments by deadline of 30 June. Picture: Jon Savage
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The “multiple failures” of a botched £178 million Scottish Government IT system to deliver vital farming payments have come under fire in a report by the public spending watchdog.

Scotland could now face EU fines of up to £125m over the missed payouts, which could result in wider public spending cuts across other services.

Ministers have now been told to devise a “disaster plan” to deal with the impact of the problems in its IT system to implement the EU’s common agricultural policy (CAP) Future’s programme.

The programme, developed to deliver payments to farmers, crofters and rural businesses, has been beset with lengthy delays, missed payment targets and rising costs, the Audit Scotland report found.

The Audit Scotland report on the five-year IT scheme which began in 2012 found that although the system was working and began making payments in December 2015, there were still “significant defects” slowing down progress.

The government admitted in March there was an “extreme risk” it would not make all the required payments by the European Commission (EC) deadline of 30 June.

Delays to payments also forced the SNP administration to offer loans to farmers through a £20m hardship fund earlier this year. Originally estimated to cost £10m, the programme now has a final budget of £178m and a reduced scope. At the end of March, it had spent £126m and funds could run out before the IT system fully meets EC regulations.

Failure to comply may lead to financial penalties of between £40m and £125m, Audit Scotland said.

The report identified a number of problems with the programme’s management, including “significant tensions between teams, confused governance and accountability arrangements, and a failure to deal effectively with a significant conflict of interest held by a contractor on the programme” who “could benefit financially from decisions he had an influence over”.

Yesterday, on the eve of the report’s publication today, former rural affairs secretary Richard Lochhead, who presided over the chaos, announced he was quitting the Scottish Government.

His replacement Fergus Ewing will now be charged with tackling the mess.

Thousands of farmers have been plunged into financial problems after the failure to provide the vital payments from the EU and joint Scottish Government EU budgets.

The cost of the programme is already almost twice its original £101m budget and today’s report warns it is “unlikely to deliver value for money”.

Caroline Gardner, the Auditor General for Scotland, 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.

“The scale of the challenge ahead should not be underestimated.”

The report by Audit Scotland today finds that “a lack of trust and blame culture” among the teams working on the project thwarted progress.

A lack of effective decision-making, weakness in governance and “conflicts of interest” among those involved are among the concerns set out in the report.

Conservative North-East Scotland MSP Alex Johnstone said: “The SNP government has taken their eye off the ball and failed farmers and our rural communities.”