Defra is dodging a £130 million bill for English farmers says FPB.

The Forum of Private Business (FPB) is accusing the Government of making a derisory offer when it comes to paying interest on the money owing to English farmers through the Single Farm Payment (SFP). The FPB understands that a rate of one per cent over the base will only be paid on money owed to farmers from 30 June 2006.That has infuriated the FPB’s late payment adviser Paul Gregory, who said it does not come close to covering the payment in full.

"The Government has stalled long enough over paying farmers and this offer is insulting and fails to meet the costs that have been incurred by them." he said.

"The Government should not only meet the interest on money owed to farmers that has accrued since the end of June, but also the months before that."

Defra promised that payments to farmers would be made in the window between 1 December 2005 to 30 June 2006 . Farmers based in Scotland and Wales were paid promptly on 1 December, but in England the wait for payment continues for over a thousand farmers. The progress in paying the SFP is to be discussed in the House of Lords today ( Wednesday 5 July 2006 ). The FPB is looking for clarification of when payments to English farmers will be completed after continued broken promises by Defra to speed up payments.

"Given that English farmers have had to wait seven months longer than their Scottish or Welsh counterparts before receiving payment, they should receive interest for those months at the Statutory Right to Interest Rate (SRI), 8 percent above base, and not the Government’s one per cent above base rate," Mr Gregory added.

"Those rates are in the UK Late Payment Legislation which the Government committed to honour and are designed to cover the costs of overdrafts and the liabilities that farmers might have to their suppliers. Does the government actually understand it’s own legislation?" he asked.

If the figure of around £1.9 billion owed to farmers is accurate, then that could mean they are missing out on up to £138 million. By the Government’s current reckoning at 1 percent above base they would pay £60 million in back payments.

The FPB has been campaigning on behalf of both farmers and contractors who carried out work for them, following the foot and mouth crisis in 2001, some of whom still have not been paid. Many farmers have been unable to pay suppliers because of delayed SFP payments and under the Government’s legislation on late payment will liable to pay eight percent interest above base rate. Mr Gregory believes Farmers are being left with the bill.

"Small businesses who work with farmers are not being paid as a result of this delay in the SFP. The result is farmers are running up more debt because of late payment legislation, something the Government has failed to recognise with this offer."

In the past five years, Defra has been taken to court over their non-payment of bills, whilst the FPB has submitted a dossier outlining the problems suffered by many businesses who have gone unpaid. Mr Gregory believes Defra’s excessive administration, which has delayed payments in England , is still a problem for farmers and businesses that work for them.

"There are still examples of complete failures in administration by the Rural Payments Agency coming to light, when is the Government going to finally resolve this issue? A speedy resolution and a more realistic appraisal of the interest owed to farmers is required." he said.

The Forum of Private Business background

The Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses. The FPB represents approximately 25,000 UK-based businesses, which employ in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.

The FPB, as the only full UK member of UEAPME – the organisation that represents small and medium-sized enterprises (SMEs) in Europe – is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK .

The FPB also provides a range of business services aimed at increasing member efficiency and profitability. Visit www.fpb.org

(7/7/06)