The Rural Payments Agency has been criticised by MPs for its “poor implementation” of the Single Payment Scheme.
The scheme, introduced by DEFRA in 2005, “continues to cause problems” for farmers, a report by the Commons’ Public Accounts Committee said.
Nearly 20,000 farmers entitlements under the 2005 and 2006 schemes were calculated incorrectly, while overpayments to farmers in those two years totalled some £37 million.
Individual farmers who were overpaid had yet to be told by how much and when repayment will be required, adding to uncertainty for many farmers, the report said.
Edward Leigh MP, PAC chairman, said while farmers were being paid earlier than they were in 2005, “errors persist”.
Failure to implement the scheme properly could lead to the government being fined hundreds of millions of pounds by the European Commission, he added.
“Restoring farmers’ confidence will depend on the Agency’s improving its business processes and IT systems to the point where it can process claims efficiently and promptly and tell farmers when they are likely to be paid.”
The report was carried out to look at the RPA’s attempts to rectify payment errors and to develop a more cost-effective service.
The RPA had been widely criticised for its implementation of the scheme, which saw some farmers overpaid while others were left waiting.
A review by the RPA estimated that £20m was overpaid to farmers in 2005, while £17.4m was overpaid in 2006.
Shadow environment secretary Jim Paice said the report marked “another damning chapter” in the handling of the Single Payment Scheme.
“It is shocking that the administration of the SPS is still out of control and that such a casual approach is being taken to the recovery of over £37 million in overpayments.
“Farmers and taxpayers cannot keep footing the bill for Defra failure. Ministers must get a grip of the situation once and for all.”