Farmers told to pay back grants

FARMERS have been told to pay back millions of pounds in EU subsidies wrongly handed out by bungling officials in the past three years.

The Rural Payments Agency has admitted wrongly paying out £37 million during 2005 and 2006 and has written to those affected demanding the money back.

But the Department for Environment, Food and Rural Affairs is urging officials not to be too heavy-handed at a time when farming, like all other areas of the economy, is struggling in the deepening recession.

The revelation comes after the European Commission announced it had fined Defra £75 million for the mess the UK Government made of paying out the subsidies in 2005.

The supposedly-simplified system was plagued with problems, and when payments were due to begin, the computer system went into meltdown and farmers were pushed to the edge. Thousands had to wait months for the payments they were rightly owed but others were given more than they were due in the system disastrously approved by then Environment Secretary Margaret Beckett.

The Rural Payments Agency has admitted that around 20,000 farmers are being asked to return overpayments. It is understood individual cases range from £300 to £15,000.

Tory MP Geoffrey Cox, who sits on the Commons committee which probes the work of Defra, said the repayments would hit vulnerable farming families.

The Torridge and West Devon MP said: "These people have banked on this money assuming it had been properly paid.

"They will suffer extraordinary hardship.

"What is iniquitous is the complete absence of sympathy that appears to be extended by the RPA.

"The RPA should not be coming down hard on families when it's their incompetence which has caused it."

A spokesman for the RPA said the agency "has an obligation to recover overpayments".

"We will be continuing to contact customers as we identify discrepancies in their claims."

According to estimates, in the 2005 payment round – the first of the Single Payment Scheme – more than 10,000 farmers were overpaid by some £20 million.

The next year, around 7,000 farmers were overpaid for the 2006 scheme by more than £17 million.

Claimants are told in their letter how the overpayment was made – and urged to hand it back.

"Repayment can cause inconvenience at any time and so RPA are offering customers a number of ways in which they can repay, including a monthly payment plan to complete the repayment within six months," said the spokesman.

But the RPA is being told to be as flexible as possible in reclaiming the cash in the current climate. Defra insists it "recognises that farmers are in the economic downturn".

"The money does have to be repaid but hopefully, it can be done in a sensible way."

However, the revelation comes in the same week that it emerged thousands of retired public sector workers were overpaid by up to £140 million – and will not have to pay back the money.

More than 100,000 ex-state workers – including military personnel, NHS staff, police and firemen – were overpaid from 1978, when a number of public sector pension schemes contracted out of the State Earnings-Related Pensions Scheme (Serps).