Swinney forced onto defensive as rural payments programme is slammed by auditor

Audit Scotland said the project “continues to have serious cost and operational issues, and is unlikely to deliver value for money” having originally had an estimated cost of £102million, which has now swollen to £178million while the project has actually reduced its scope.

The damning verdict was delivered by the financial watchdog in its fourth update on the progress of the five-year Futures programme, an IT and business change scheme started in 2012 to deliver European Union’s Common Agricultural Policy (CAP) reforms.

The CAP provides financial support to farmers, crofters and rural businesses.

At the end of March, £126million had been spent, according to the lastest figures, and funds could run out before the IT system fully meets European Commission regulations.

Such a scenario could lead to financial penalties of between £40million and £125million being imposed on the Scottish Government.

A statement from Audit Scotland said: “The programme has experienced considerable difficulties, particularly with the slow delivery and poor performance of a new IT system to process support claims. This has caused lengthy delays, missed payment targets, and rising costs. The delays have had a negative impact on farmers, many of whom were already experiencing financial difficulties caused by low milk prices and severe flooding.

“The Scottish Government made a number of decisions in order to speed up payments and meet ministerial targets, which then slowed the progress of other key stages in the programme.”

Audit Scotland said it has 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.

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.”

However, Deputy First Minister John Swinney said farmers had been warned from the outset of the project that delays to their EU payments should be expected as a result of the new system, which he said was one they had called for and any delays “was a price they were prepared to pay” in return for introducing an IT system that met their requirements.

He accepted there had been “significant difficulties” but claimed it was “nonsense” to suggest the system was not working.

He added: “The industry was very clear with government that it wanted us to promote more options and more possibilities to be put into the scheme.

“We warned the industry in 2014 that if we did that it might jeopardise the timetable for payments, and the industry said to us that that was a price that they were prepared to pay because it would deliver a scheme more in their interests.

“So, we accepted that, that added to the complexity.”

He also batted away warnings that the Scottish Government could face penalties of £125 million for the delays.

Interviewed on the BBC’s Good Morning Scotland, Mr Swinney said he “did not recognise that £125m) number”.

Conservative North East MSP Peter Chapman, however, called for a full investigation.

He said: “The Audit Scotland report is among the most damning ever to be produced by the organisation.

“It echoes what communities across rural Scotland have been saying for some time, but instead of taking responsibility, John Swinney has opted to suggest the industry only has itself to blame.” Labour rural affairs spokeswoman Claudia Beamish called for an urgent statement to parliament.

AuditScotland will report again on the progress of the programme later this year, as part of the 2015/16 audit of the Scottish Government’s accounts.

Responsibility for the programme now falls to newly appointed rural affairs secretary, Fergus Ewing.