SCOTLAND'S PARLIAMENT and government have been hoodwinked into giving farmers an extra £40 million of taxpayers' money this year, despite advice from officials that it would be "gross over-compensation".
A dossier of internal emails and memos from the former Scottish Executive reveals that the then Liberal Democrat rural development minister, Ross Finnie, misled MSPs and fellow ministers over the payment. The European Commission was kept in the dark and rules were bent to ensure that farmers received the money in the run-up to the election in May.
The £40m pay-out is regarded as "absolutely scandalous" by insiders. It triggered a private pre-election row between Finnie and the then Labour finance minister, Tom McCabe. It also resulted in the retrospective doctoring of a government news release.
Opposition MSPs are this weekend demanding investigations into exactly where the money came from.
The dossier also sheds an unprecedented light on decision-making within the
Scottish Executive, and raises questions about the process of government.
And it betrays the extraordinary influence that the National Farmers Union
in Scotland (NFUS) can exert on ministers and officials.
The story of how the NFUS managed to win a £40m bonus in the months before
the 2007 Scottish election is exposed in 100 documents obtained by the
Sunday Herald. The government wanted to keep them secret but was forced to
release them by the information commissioner, Kevin Dunion.
Although the pay-out predates the SNP government, the aftershocks are still
reverberating. Current ministers have been deprived of money they could have
used to help bridge major funding gaps in their first budget, due later this
month.
Richard Lochhead, the rural affairs secretary, has just invited 13,000
farmers to apply before November 16 for £61m worth of subsidies. If Finnie's
claim that the cash was not additional money was correct, only £21m would
have now been handed out because of the £40m already paid out.
Finnie told farmers, the Scottish parliament's environment and rural
development committee and finance minister McCabe that the £40m was "not
additional". But the dossier makes clear that it was extra money from within
the Executive's budget, and that the amount was far in excess of what
officials thought was reasonable.
The news release announcing the pay-out in January this year was altered by
Finnie to include the phrase "the £40m is not additional". But after the
NFUS complained that this was inaccurate, the phrase was deleted from the
Executive's website.
On Friday Finnie strongly denied the £40m had been a "pre-election bribe"
for farmers to help elect Liberal Democrats in rural constituencies. "That
was not in my brain anywhere," he told the Sunday Herald.
He maintained the money was not additional because it covered a gap in
funding caused by an eight-month delay in grant payments under European
regulations. "I was concerned to smooth out that payment gap," he said.
"Month by month the amount that was actually paid out to farmers didn't
change," added Finnie, now the LibDem health spokesman. "I thought what we
were doing was making an advance payment."
But Labour's shadow cabinet secretary for rural affairs, Sarah Boyack,
believes she was misled by Finnie when she was convener of the rural
development committee. "I am deeply disappointed that the answer given to me
as committee convener does not appear to have been the correct position. I
will be laying parliamentary questions to the cabinet secretary for
clarification on this matter, in particular to ascertain where in the budget
this money came from."
Green MSP Robin Harper said: "It seems very unclear what's happened with
this public money, and an investigation by Audit Scotland is required to
find out who's right and to establish whether this money has been properly
allocated."
According to the NFUS, an extra payment to farmers was necessary to bridge
the eight-month delay in 2007 payments. The executive offered £40m "which we
were clear was a supplementary payment", said the union's deputy chief
executive, James Withers.
The payment was made under the Less Favoured Area Support Scheme (LFASS),
which mainly helps hill farmers in Scotland. "Under the old system the last
payment was made in May 2006 and the next payment under the new system was
not going to be until January 2008," said a spokeswoman for the Scottish
government. "The one-off payment of £40m issued under LFASS in January 2007
was because the cycle of payments had shifted by eight months."
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