New loan scheme for farmers announced

A new loan scheme is to be offered to Scottish farmers to prevent a repeat of the problems caused by delays to Common Agricultural Policy (CAP) payments.

It was announced by Rural Affairs Secretary Fergus Ewing, who admitted that the IT system largely responsible for the delays was "not there yet".

Mr Ewing said next year's payments were therefore "not-risk free".

But he said farmers and crofters would be able to apply for a loan worth 80% of their total entitlement.

Farming union NFU Scotland welcomed the new scheme, which it said would give clarity and certainty to farmers.

But opposition parties claimed the scheme was an admission that problems with the CAP payment system may not yet have been resolved.

Financial difficulties

The CAP Futures programme in Scotland was meant to make the rural payment process more efficient.

But problems with a new Scottish government IT system caused delays to many farmers receiving the money.

In May, public spending watchdog Audit Scotland said the lengthy delays had a major impact on farmers - many of whom were already experiencing financial difficulties caused by low milk prices and severe flooding.

Mr Ewing told MSPs at Holyrood that 17,744 out of 18,479 eligible businesses had now received their 2015 payments, with "the majority of outstanding cases" expected to be paid by the 15 October deadline.

Mr Ewing said he expected that CAP payments for next year would be made on time

He also said he expected that the next round of payments for 2016 would be "substantially completed" by the deadline at the end of June next year.

But Mr Ewing said the new loan scheme would provide certainty for farmers and crofters over the winter, and would seek to "inject up to £300m into the rural economy, safeguarding jobs and local agricultural businesses".

He told MSPs: "Having learned lessons from the 2015 round of CAP payments, I am determined to provide as much certainty as we can, not just for farmers and crofters, but for the wider economy in our rural communities.

"I am therefore announcing today that farmers will not have to wait until 2017 to receive payment of their CAP entitlement.

"Letters will be issued before the end of the month to farmers inviting them to apply. Everyone who applies by the deadline of 12 October will receive a loan of 80% of their entitlement in November."

'Bitter legacy'

Responding to the announcement, NFU Scotland president Allan Bowie said it would have a positive impact on the whole rural economy.

Mr Bowie added: "Knowing that up to 80% of your support package will be delivered in early November gives clarity and certainty to farm businesses.

"The bitter legacy of the flawed 2015 payment run continues and the cabinet secretary again apologised for the problems, some of which still remain.

"On behalf of our members, we will continue to keep pressure on the Scottish government until all outstanding payments for 2015 have been delivered."

But Peter Chapman, the Scottish Conservative rural affairs spokesman, said the loan scheme was effectively an admission by Mr Ewing that problems with the computer system had still not been resolved.

Mr Chapman added: "He can't deliver 100% payments in December as we should expect - instead he has to offer an 80% loan for November.

"These loans are an admission of failure. This is not good enough and it certainly won't win the trust of the farming community which has long run out of patience with the SNP on this issue.

"Mr Ewing should finally agree that we need a parliamentary inquiry into this issue."

Mike Rumbles of the Scottish Liberal Democrats said Mr Ewing's claim that the loan scheme was injecting £300m into the rural economy was "complete nonsense" because "farmers should already be receiving full payment anyway if the new system was working properly".

He added: "The statement today was a dreadful admission of the failure of the Scottish government.

"His 80% loan plan will be offered to all applicants but this still means that the average farm business will be over £6,000 out of pocket goodness knows how long."