Euro ruling could delay payments

European Commission auditors have forced Defra to start discussions on re-organising the timing of stewardship payments from next year.

Defra says there is no question of farmers having to repay money, or not getting what they are due. But it is likely that starting in 2011, payments will have to be held until they have all been cleared, so they can all be paid out at the same time.

EC auditors say the UK is currently bending the rules by making payments on a rolling basis, as each grant application is cleared.

Although Defra regards the criticism as nit-picking, it is obliged to react. A departmental statement this week said: "We will have to make changes to comply with the Commission's interpretation of the legal requirements. Defra is making every effort to minimise the potential impacts and to persuade the Commission to adopt a flexible approach, but it is likely there will be some delays to at least some payments.

"Farmers are encouraged to continue to apply for new or renewed environmental stewardship agreements as before.

"Discussions with the Commission have focused on how we make our payments, not on the level of payments. In other words, payment dates might change for some farmers but the amount of money paid over the lifetime of your agreement will remain the same."

Mr Worsley of the CLA said the EC's concern was that payments might be made to claimants who were ineligible but who died or went bankrupt before the money could be got back. He had checked the figures and the EC's recommended system would have saved less than 1,000 between 2007 and 2010 from an agri-environment budget of 393m a year. He called the EC intervention "ludicrous".

But an EC spokesman said the rules were made to assist auditing and all other members complied with them. The UK government could give farmers an advance on their allowances if it wished to.

NFU president Peter Kendall said: "To find ourselves in this situation is astonishing given that these schemes have been in operation for several years and were approved by the EU Commission.

"This situation could seriously compromise the cash flow of many farmers and growers who rely on regular agri-environment payments when planning for their business."

CW 10/7/10