Union calls for focus to remain on delivery of support payments

Details on the Scottish Government’s Hardship Scheme, announced by Cabinet Secretary Richard Lochhead last week at NFU Scotland’s AGM have been announced.

The scheme is in response to the severe IT problems Scottish Government has encountered in delivering support payments to farmers and crofters.

NFU Scotland understands, as of last Friday, approximately 40 per cent of support scheme applicants had received part payment of their Basic Payment Scheme (BPS)/greening. However, that equates to only £75.7 million (19 per cent) of the £393 million 2015 BPS and greening budget meaning that the current hole in the Scottish rural economy is more than £300 million.

Lending banks will be central to the way the hardship fund will operate with loans through the scheme being made available to those who have applied to their lender for extra borrowing and have been unsuccessful in securing additional finance.

In summary, those farmers and crofters experiencing cash flow problems that cannot be accommodated within their current borrowing arrangements are urged to contact their bank.  Each farmer’s bank would apply its normal business rules and, if possible, make a cash flow loan on normal commercial terms.  That could include an extension to the overdraft.  In discussions with NFUS, most banks have indicated no fees will apply, but normal commercial interest rates will.

NFU Scotland, through recent talks with the main lending banks, understand that this procedure should allow cash flow funding to be made available to the vast majority of Scottish farm businesses that need it.

If that still fails to resolve cash flow issues for the farm, then access to the £20 million Scottish Government fund would be available.

NFU Scotland President Allan Bowie said: “The Cabinet Secretary, when he addressed our AGM last week, was left in no doubt about the impact that the failure to deliver basic support – and the potential knock on delays to other vital schemes including Less Favoured Area Support Scheme – is having on farm business cash flows.

“Payment delivery failure means there is a huge £300 million hole in the Scottish rural economy at this point in time and Scottish Government’s focus must remain firmly on payment delivery.

“Details on how the hardship fund will operate are different to what people had envisaged when it was first announced at our AGM last week.  

“It will encourage all farms who have yet to have a conversation with their banking provider to do so and will, hopefully, see established relationships between a farm business and their lender solve cash flow gaps.  That will see access to the hardship fund preserved for those in a desperate place and who have absolutely no alternative route to keeping their businesses going.

“We have said to Scottish Government that they must guarantee that anyone not getting funding from the banks will be guaranteed funding from the Scottish Government administered loan scheme and that the Scottish Government administered loan scheme must pay an advance equivalent to a high percentage of the payment that the farmer or crofter would ultimately get from the Basic Payment Scheme.

“In terms of priorities for the industry, this scheme must not detract from Scottish Government efforts to get vital support payments out the door to as many claimants as possible.  

“By our estimates, less than a quarter of Scottish Government’s £400 million pot for BPS and greening has been shared.  That huge financial hole dug by Scottish Government is currently being plugged by banks, auctioneers, feed merchants, machinery dealers and others associated trades.”  

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Contact Ruth McClean on 0131 472 4108