Some 13,000 farmers are having their payments under the European Union’s Common Agricultural Policy (CAP) reviewed over concerns they have been penalised for discrepancies that were down to a failure to update official systems.
The European Commission has also imposed penalties of £65.8 million in the past year on the Department for Environment, Food and Rural Affairs (Defra) for failing to control and administer payments properly under the subsidies system.
The failings emerged in a National Audit Office report which also warned that further fines, known as “disallowance payments”, were likely in the coming years even after Britain leaves the European Union.
The majority of the penalties were connected to the single payment scheme, now known as the basic payment scheme.
Richard Wadsworth, the National Farmers’ Union basic payment dcheme adviser, said it had been warning the Government about the problem “for many months”.
He said: “The public admission by the RPA that there are at least 13,000 farmers’ claims from the 2015 scheme year that need reviewing after they had supposedly be paid correctly in full puts more strain on a system that has yet to get up to speed and at a time when the agricultural sector needs this money to bring some relief from depressed commodity prices and significant cash flow pressures.
“No one wants to be paid late, and certainly no one wants to be paid incorrectly.
“This situation has added to the stress on the industry at this time, which cannot be underestimated at a human level.”
The National Audit Office said the total amount paid by the UK in disallowance payments in the last CAP funding round from 2007 to 2013 was £661m.
Country Land and Business Association North regional director Dorothy Fairburn said: “Defra must do all it can to avoid disallowance fines.
“The situation with payments last year was simply not good enough and we are working closely with the Government to ensure Yorkshire farmers and land managers receive their payments on time this year.”
An assessment by the NAO found that Defra had experienced difficulties paying farmers accurately. Where there were differences between farmers’ claims and information held by the department, only the amount of the claim that matched the official information held was paid out.
Defra also deducted penalties calculated on the basis that all differences were due to errors made by farmers, but the most common discrepancy is where the department had not updated its systems to include all the information from landowners.
The underpayments and penalties reduce the risk of the department being fined by the EU but delay full payments being made to farmers, the NAO said.
A Defra spokesman said: “We understand the importance of rural payments to farmers and over 87,000 farmers successfully registered on the Rural Payments system in 2015.
“It has been used to process and pay over 86,700 farmers - over 99 per cent of all those eligible - their Basic Payment Scheme payment. We are taking action to tackle the causes of disallowance and are making a significant investment in our mapping data. This will be used to better administer CAP payments.”