Britain forced to pay pounds 49m EU fine

The Government faces paying millions of pounds in penalty "fines" to the European Commission because cutbacks in Ministry of Agriculture staffing levels led to late payment of farming subsidies, it was claimed yesterday.

Last year, in a little-publicised move, Britain had to pay back up to pounds 49m to the EU for failing to meet tough guidelines on subsidy payments to British farmers, according to civil servants within the department.

Further cutbacks, coupled with the resources diverted to the BSE scandal, mean that the Government will have to make similar "disallowance" payments in the spring, civil-service unions are claiming.

Such "fines" would prove an embarrassment for John Major in the run- up to the general election as he tries to reconcile his party's Euro-sceptic and Europhile wings.

According to the ministry's own statements, the Government failed to meet the EU's "exacting standards" to pay more than 95 per cent of set- aside and other crop payments to farmers for the year ending 1995. Instead, only 83 per cent of payments were made by the deadline.

A ministry document reads: "Due, however, to the burden of validating claims to the exacting standards required under EC rules which proved to be greater than anticipated, only 83 per cent of main payments on set- aside and other eligible crops were paid by 31 December (1995), compared with the EC requirement of 96.14 per cent."

Its annual report confirms a shortfall between EU payments and the cost of the scheme at pounds 48.79m.

The total cost of administering the subsidies - totalling pounds 1.3bn - is a little over pounds 6m. Normally the cost of the subsidies is met by the European Commission, but where there is a penalty this comes directly from the national government concerned.

Civil service unions say the delays and subsequent payments were "directly attributable" to staffing problems in the ministry's regional service centres which administer the payments to farmers.

They point to a 10 per cent cut in staffing levels in the current year plus a projected 7 per cent reduction in "baseline" running costs in the next financial year, confirmed to them by the ministry's Permanent Secretary Richard Packer.

David Luxton, an official of the Institution of Professionals, Managers and Specialists - one of the four unions that recently met the Minister of Agriculture, Douglas Hogg, to complain about the cutbacks - said the ministry had turned economics on its head.

"There is now no relationship between these so-called efficiency cuts and effectiveness," he said. "These cuts are short-sighted and counter- productive. [Last] year Maff was 'fined' a total of pounds 49m by the European Commission for delays in payment to farmers of arable crop subsidies."

Last night a spokesman for the ministry confirmed there had been penalty payments but said the figure was nearer pounds 17m.