Illegal subsidy going to Scots commission

02 July 1999

Illegal subsidy going to Scots — commission

By Allan Wright

THE European Commission has ruled that some subsidy payments going to Scottish hill farmers are illegal.

The Scottish Office has been forced to write to 250 farmers admitting that its interpretation of environmentally sensitive area rules has been wrong.

Subsidy payments, some going back four years, will have to be reclaimed.

Under the ESA scheme, grants are available for reducing sheep stocking rates on hill land.

But the Scottish Office allowed the sheep annual premium (SAP) quota to be transferred to non-ESA parts of the holding.

The commission, however, has said such a move is illegal and that the quota involved cannot be sold, leased out, or transferred to other parts of the farm.

About 10,000 units of quota, yielding an annual subsidy income of £250,000, are involved.

The Scottish NFU is to contest the decision, seeking a derogation for those already in the scheme.

A Scottish Office official confirmed that the interpretation of the ESA de-stocking scheme had been ruled illegal by the EU which was demanding repayment of subsidies.

“We have written to the 250 farmers involved and explained the situation to them.

“It would be possible for the government to repay the money involved but that might then be challenged as an unacceptable state aid,” he said.

“No decision has been made about how repayment is to be organised.

“It could be reclaimed from the farmers or withheld from their next SAP cheque,” he added.

Scottish NFU president Jim Walker said farmers had done nothing wrong.

“They operated the scheme as it was explained to them,” he said.
“Some have been in the de-stocking scheme for four years and could be facing large bills for something which is not their fault.”