Legacy costs and the possibility of further fines could increase total spending on programme to manage CAP payments
Scotland’s government auditor has said significant risks and costs are lingering for the Scottish Government from the legacy of the business change and IT programme to reform the country’s management of the EU Common Agricultural Policy (CAP).
Audit Scotland has published a report on the five-year, £178 million Futures programme highlighting the significant issues that remain following its closure at the end of March.
It says that parts of the IT system are still being developed by the Agriculture and Rural Economy (ARE) directorate. While ARE expects to deliver a system that complies with the CAP within the original budget, a technical assurance review has indicated that the Scottish Government will face extra costs to improve and stabilise the system.
Contracts with two existing suppliers have been extended at a projected cost of £33 million, and a disaster recovery solution for the IT systems has not yet been fully developed and tested.
This comes after the auditor warned a year ago that the mismanaged introduction of the IT system had created serious problems for managing the payments.
The new report says the applications process for payments has improved, but there are still problems with making payments. This follows delays in 2016 that led the Scottish Government to use loan schemes to get the money to farmers more quickly.
It has estimated that it will incur fines of about £5 million from the EU for missing last year’s payment deadlines; but Audit Scotland has estimated that with additional penalties the figure could go as high as £60 million.
The Scottish Government is now making changes to improve long term strategic thinking and capacity, but these will need time to bed in. Also, management time is still being taken up by responding to short term risks.
Auditor General for Scotland Caroline Gardner said: "The challenges of building a complex rural payments system mean the Scottish Government is juggling multiple demands on its time and resources. This has had an impact on its progress over the past year.
"It's crucial that knowledge is effectively transferred to staff so the system can be maintained and payments made on time for 2017. The Scottish Government also urgently needs to fully understand the financial risk it faces, so that it can target funding at ensuring the system is compliant and secure."
Audit Scotland has urged the Scottish Government to take several steps that include developing a framework for future investment that balances IT system requirements with budgets, customer expectations and EU regulations and audit findings.
Picture by Paul McIlroy, CC BY-SA 2.0 via Wikimedia Commons