The “outrageous” practice of charging farmers interest on loans they only resorted to because of Government failures must end, says an MEP.
Farmers and crofters have to pay 4.2% interest if they are overpaid hardship funds distributed to mitigate the impact of delays to EU subsidy payments, as revealed in The Courier.
Tavish Scott, the Liberal Democrats’ agriculture spokesman, said it was a “slap in the face” for blameless farmers facing a cash flow crisis amid the failure of the Scottish Government’s £178 million IT system to process basic Common Agricultural Policy payments.
Ian Duncan, the Conservative MEP, has joined the ranks of those angered by the decision to charge “punitive” interest and has demanded Rural Affairs Secretary Richard Lochhead backs down.
“Farmers never wanted loans. They want the monies that they were entitled to as far back as October. Mr Lochhead, or the First Minister, must immediately rule out these outrageous charges,” he said.
Around £200m of national funds was set aside to hand to farmers as cash advances while they hang in limbo. The interest charges only kick in if the loan amount is greater than the entire CAP payment they eventually receive and seven days after the latter is paid.
The Scottish Government said the system is designed so the loans are typically 80% of the claim meaning most will not have pay interest.
But the theory of charging interest more than eight times the Bank of England rate has not gone down well with farmers, with some saying they are being treated with “contempt” and “utter disregard”.
An SNP spokesman said: “The fact of the matter is that the Scottish Government has now processed payments for the vast majority of farmers which should be welcomed by those of all political persuasions.
“Great efforts have been made to ensure that no farmers lose out in this process.
“By contrast, leading Tory politicians including ministers responsible for farming in the UK government would rather see support for farmers cut off altogether by the UK leaving the EU.”