EU payments programme still faces major obstacles, report claims
The Scottish Government programme set up to process farmers' European Union (EU) payments continues to face "major obstacles" and is unlikely to deliver value for money, the Auditor General has said.
The Scottish Government programme set up to process farmers' European Union (EU) payments continues to face "major obstacles" and is unlikely to deliver value for money, the Auditor General has said.
The programme, developed to deliver the EU's Common Agricultural Policy (CAP) payments to farmers, crofters and rural businesses, has been beset with lengthy delays, missed payment targets and rising costs, an Audit Scotland report found.
Opposition parties said the spending watchdog's findings revealed a "litany of failure" and "incompetence" as they called on the new Rural Secretary to conduct a swift review.
Richard Lochhead resigned from his post as Environment Secretary just hours before Nicola Sturgeon's cabinet reshuffle on Tuesday in which she appointed Fergus Ewing as Rural Economy Secretary.
The Audit Scotland report on the five-year IT scheme which began in 2012 found that although the system is working and began making payments in December 2015, there are still "significant defects" slowing down progress.
The Government admitted in March there is an "extreme risk" it will not make all the required payments by the European Commission's (EC) deadline of June 30.
Delays to payments also forced the SNP administration to offer loans to farmers through a £20 million hardship fund earlier this year.
Originally estimated to cost £102 million, the programme now has a final budget of £178 million and a reduced scope.
At the end of March, it had spent £126 million and funds could run out before the IT system fully meets EC regulations.
Failure to comply may lead to financial penalties of between £40 million and £125 million, 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".
Caroline Gardner, Auditor General for Scotland, said: "The CAP Futures programme has been beset with difficulties from the start.
"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.
"It's vital that the Scottish Government take steps now to ensure the IT system is fit for purpose and fully assess the potential financial impact if it's unable to meet the commission's regulations within the programme's remaining budget."
Scottish Conservative MSP Alex Johnstone said: "Now that Richard Lochhead has stepped down the First Minister must urgently look to resolve this situation because livelihoods and jobs depend on it."
Scottish Liberal Democrat MSP Mike Rumbles said: "Audit Scotland has uncovered a litany of failure and staggering incompetence dating back two years."
Scottish Labour's Jackie Baillie said: "The SNP need to make an urgent statement to parliament about this scheme and then conduct a swift in-depth review to identify and resolve the failures we have seen."
Scottish Greens Mark MSP Mark Ruskell said the "IT shambles" was "inexcusable".
Deputy First Minister John Swinney said the Government's focus was on processing the remaining payments while "keeping a tight rein on activity, costs and risks".
He added: "The challenges involved in implementing these reforms have been apparent for some time.
"We've been open about them and determined in our response, because we know the impact this has had for the agricultural community.
"Audit Scotland's report, its third on the programme, is an important part of the process of learning the lessons from this programme. I'm determined that we do that and we will study the detail of the report carefully.
"Once this is completed, the new Rural Economy Secretary will make a statement to Parliament to set out in full the Government's response."
He added that progress has been made since Audit Scotland carried out their work for this report, with around 80% of first instalments have now been paid using the new system.