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MPs have condemned the government's implementation of an EU subsidy scheme for farmers as a "master class in bad decision-making".

In a report published today, parliament's public accounts committee (PAC) said that a failure by officials to ensure that farmers received payments on time led to "stress, anxiety and financial hardship" across the agricultural sector.

The Department for Environment, Food and Rural Affairs (Defra) and its Rural Payments Agency (RPA) had intended that British farmers should receive the 2005 payments by March 2006.

In all, the government spent some £122 million across England implementing the single payment scheme, an EU land area-based funding programme which replaced production- based common agricultural policy (Cap) subsidies.

But MPs said officials underestimated the scale of the work needed to implement the scheme and that as a result, only 15 per cent of the £1.5 billion due to farmers had been paid by March 31st 2006 – far below the government's 96 per cent target.

The PAC added that some 3,000 farmers remained unpaid at the end of October 2006.
Parliamentarians said that the "haste" of the government to have the scheme ready on time meant that officials "failed to adhere to basic principles of project implementation".

MPs also claimed that Defra's "deliberate choice" to adopt the most complex option for implementing the new payments system, within the shortest possible timescale, had led to farmers not receiving their cash on time.

The PAC report warned that taxpayers would have to pay additional implementation costs as a result of the failings, with the government facing the possibility of having to pay European Commission fines over its botched administration of the single payments scheme.

Responding to the report, Defra stressed that it had introduced various changes to the way claims are processed so that 96 per cent of farmers had received the subsidy they were entitled to by June 20th this year.

"The problems with the RPA are well known and a wide range of actions have already been taken to improve performance which has meant an improved service to farmers and better cash flow," said a spokesperson for the department.

However Defra acknowledged that further action was needed to alleviate the difficulties faced by farmers as a result of the implementation of the single payment scheme and said that officials would formally respond to the report within two months.