Bail out fund launched for farmers facing delayed pay-outs

THE Bank of Scotland has set aside a £500 million fund to bail out farmers if payments that act as a safety net for the industry are not made on time.

Conservative rural affairs spokesman Alex Fergusson said the move by the Bank of Scotland showed a lack of faith in the Scottish governments handling of the payments. Picture: Robert Perry

Scottish government ministers have faced fresh calls to guarantee that the state support, which is worth thousands of pounds to each farmer, will be paid on time following the move.

However, Bank of Scotland stated that it had launched an emergency fund due to concerns that the cash will not arrive for the deadline at the end of December.

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A Bank of Scotland briefing paper for MSPs said: “Bank of Scotland has established a £500 million fund to help agriculture customers who are eligible to receive a basic payment and would be adversely affected in the event of a delay”.

Bank of Scotland, which is owned by Lloyds Banking Group plc, said the UK-wide fund is needed partly due to concerns “about a possible delay to the payments being received in December” in Scotland.

It added: “This of level support to the farming community and also the wider rural sector underlines Bank of Scotland’s commitment to supporting Scotland.”

Other institutions such as The Royal Bank of Scotland are offering bridging loans to help farmers who do not receive the cash on time, but does not have a capped fund, while Clydesdale Bank does not have a specific bail out fund for the sector.

Conservative rural affairs spokesman Alex Fergusson said the move by the Bank of Scotland showed a lack of faith in the Scottish government’s handling of the payments, which are made to farmers producing agricultural products that are in public demand.

Mr Fergusson said rural affairs secretary Richard Lochhead was still unable to give guarantees to the Scottish Parliament, despite having a year to resolve the issue.

Ministers have been widely criticised for the troubled roll-out of a new system for farmers to register for their payments after costs doubled, new staff had to be hired and deadlines for applications extended.

In October 2014 MSPs on Holyrood’s public audit committee heard changes “may affect the usual timetable” in relation to this year’s payments, that are funded by the European Union but administered by the Scottish Government.

Mr Fergusson said: “If a bank feels it necessary to put aside half a billion pounds it doesn’t say much for its faith in the Scottish Government’s ability to make these payments on time.

“I applaud the Bank of Scotland for taking this step – but it’s not one that should be needed.

“This is a system which the Scottish Government has complete control over and responsibility for.

“Richard Lochhead has known for a year that these payments may not be processed on time, and still he can’t offer a guarantee to farmers, whose businesses depend on these payments and knowing when they will arrive.”

Mr Lochhead previously said while he was working hard to ensure payments arrive by the end of the year “of course … I can’t make any guarantee of that”.

In response to a question from Conservative MSP Cameron Buchanan, he again failed to offer guarantees, saying only: “We are working flat out to do our best to ensure that payments will begin during the formal payment window, which is before the end of December.”