Defra sets aside 'hundreds of millions' of pounds in anticipation of EU fines

The penalties are imposed by the European Commission
The penalties are imposed by the European Commission

Defra has set aside hundreds of millions of pounds to deal with impending fines levied by the EU over CAP 'disallowances.'

The penalties are imposed by the European Commission when it believes a member state has not complied with its requirements to control and administer subsidy payments properly.

The department has said £230m is the sum likely to be imposed against the UK by the EU.

The department said in their annual report: "The resource annually managed expenditure budget has increased due to an increase in our provisions budget for potential disallowance."

Defra has already incurred a total of £642m in financial penalties in the past 10 years.

The main causes of 'disallowance penalties' in the UK under previous CAP scheme were late payment to farmers, poor mapping data used to verify applications, and shortcomings in cross-compliance controls.

The UK Government should have allowed farmers to register for EU subsidies online around 2014, but it was forced to return to a partially paper-based system due to what farmers called 'poor website performance' just weeks before the deadline.

'Frightening'

Countries which have had previous higher rates of penalties included Portugal, Romania, Greece, Cyprus and Bulgaria.

Defra has considered investing up to £45 million, which it believes could save future penalties for England of between £215 million and £370 million in the period to 2021.

Meg Hillier, the chairwoman of the Commons Public Accounts Committee, has previously said that the prospect of further fines was "frightening".

"Complicated CAP rules don't help but the department must get a grip to deal with these persistent problems and ensure we aren't throwing away taxpayers' money on financial penalties," she said.

In 2015, the National Audit Office (NAO) warned the amount of fines levied was likely to rise because the policy had been made more complex.