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Last Updated: Wednesday, 21 June 2006, 13:05 GMT 14:05 UK
Farmers hit by subsidy delays
Sheep and lambs
Cap reforms have been blamed for the delays paying subsidies
An estimated 13,000 farmers across England have still received no subsidy under the new rural payments scheme introduced 18 months ago.

Many have exhausted bank overdrafts and are unable to pay their farm bills, according to an investigation by the BBC's File on 4 programme.

The government faces a fine of tens of millions of pounds for failing to meet a 30 June European Commission deadline.

A UK request for more time to pay the 2005 subsidies was refused.

The Rural Payments Agency (RPA), set up to distribute the payments, failed to get the money out at the start of the year and has been struggling ever since.

The effects are now being felt in the rural economy.

In all, 120,000 farmers have fallen foul of the new way agricultural subsidy is being paid.

Arthur Hill, who runs an arable and livestock farm in Shropshire, is expecting more than 100,000.

"It's too much money cash-flow wise to have outstanding," he says.

Christopher Jones of the support group, Farm Crisis Network, compares the current crisis to the foot-and-mouth epidemic.

Combine harvester
If I'm not paid by 30 June, I will be looking for interest and compensation
Arthur Hill
Shropshire farmer

"I remember one person who was in danger of losing their tenancy and their land because they hadn't paid the landlord," he says.

"This is a deeply upsetting thing that has affected most of the rural farming community."

At the root of the delays are the on-going reforms of the Common Agriculture Policy.

Under the new system, English farms will get a single payment every year for looking after their land, instead of a subsidy for producing food.

It means that groups not previously eligible for subsidies, such as vegetable growers and pony paddock owners, can now apply.

The agency was overwhelmed when it received 40,000 more claims than expected.

Lord Whitty, farming minister when the scheme came into force, says the increase in the number of claimants had not been anticipated.

"We were told fairly clearly [by the RPA] there would be a limited number of additional claimants coming in," he says.

EU deadline

Inquiries are under way into why the RPA became so dramatically unstuck, and why the IT costs have risen from 18m to 36m.

To get a share of the 1.4bn subsidy pot on offer, accurate mapping of claimant's land was essential.

But the RPA encountered difficulties in processing the maps from applicants because they did not always correspond to what was on the agency's computers.

Without the correct maps, the RPA could not validate claims.

Now the agency faces a rush to meet the 30 June deadline set by the EU for issuing 96% of last year's payments.

Farming Minister Lord Rooker tells File on 4: "We've got over 90% and there's still three quarters of June to go, I'm not making any promises but we are paying money out almost on a daily basis."

The European Commission has refused a request by the UK government to extend the 30 June deadline.

This will give farmers the right to take court action for interest and compensation if the deadline is missed.

"If I'm not paid by 30 June, I will be looking for interest and compensation," Arthur Hill says.

File on 4: BBC Radio 4, Tuesday 20 June at 2000 BST, and repeated on Sunday 25 June at 1700 BST. Or listen online - see links on the right hand side of this page.

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