Land deal costs Northern Ireland taxpayers millions

The land at Crossnacreevy was found to be worth a fraction of its valuation

Taxpayers have lost millions of pounds in a land deal between two Northern Ireland government departments, an Audit Office report has revealed.

The report said the Department of Finance and Personnel accepted an informal valuation of £200m on a Department of Agriculture property.

The County Down property was later found to be worth as little as £2.28m.

The land deal was prompted by pressure on the Agriculture Department to help farmers tackle water pollution.

The building of new slurry stores and middens was seen as necessary to help reduce nitrates seeping into waterways such as Lough Neagh and the Erne.

However, despite offering farmers grants of 40% towards building costs, uptake of the farm nutrient management scheme was initially low, raising the prospect of Northern Ireland facing legal proceedings and fines by the European Commission.

More than £200m

The Department of Agriculture then came up with a plan to sell off the 84-acre plant testing station at Crossnacreevy on the outskirts of Belfast and use the money to boost the grant rate to 60%.

To do that it needed approval from the Department of Finance and Personnel which it provided with an informal valuation suggesting that with planning permission, the Crossnacreevy site was worth more than £200m.

The Department of Finance and Personnel was persuaded to provide the capital cover needed and gave the Department of Agriculture approval to increase the grant rate to farmers.

The Audit Office report said the persuasive point for the Department of Finance was that the £200m capital receipt was considerably larger than the Department of Agriculture was seeking approval to utilise in the farm nutrient management scheme.

The informal valuation though, turned out to be wide of the mark.

An official valuation by Land and Property Services in March 2008 judged the Crossnacreevy site to be worth a maximum of £5.8m and possibly as little as £2.28m.

Increased

The report by Land and Property Services also highlighted relocation costs of £6m associated with moving the plant testing operation to another site.

But while the reality about the value of the Crossnacreevy site took some time to emerge, grant payments to farmers had already been increased.

The Department of Agriculture had been given permission to more than treble spending on the scheme from an initial £45m to £144m.

One in five applications was for the maximum grant available of £51,000.

The average grant application of £31,231 was nearly three times that predicted in an economic appraisal.

In the end some 4,000 farmers received grants totalling £121m.

But rather than the money coming from the sale of Crossnacreevy, the site remains unsold.

The Department of Finance has had to find the money from other budgets to meet the extra spending it agreed to.

The farm nutrient management scheme turned out to be the largest capital grant scheme ever run by the Department of Agriculture.

Aggriculture Minister, Michelle Gildernew, said on Wednesday that it was "wrong" to say taxpayers' money had been "wasted".

"The scheme was a big capital grants scheme where there was a considerable investment," she said.

"£121m was invested by the department and £80m invested by farmers to help improve water quality and create storage for slurry on farms."

The minister said the scheme had also "saved hundreds of construction jobs".

Ms Gildernew said the land remained "valuable" to the department's work and that the property market would recover in the future.