Scottish BPS Loan Scheme

It appears this year that Scotland are not taking any chances with their BPS IT system.  The Scottish Government has announced a nationally-funded loan scheme for 2016 payments.  Farmers and crofters will be able to apply for a loan of 80% of their anticipated 2016 Basic Payment, including Greening, up to a maximum of €150,000. 

Those who are eligible for a payment this year will be sent a letter and will be able to apply for the National Basic Payment Support Scheme (NBPSS) 2016-2017.  Letters will be sent out from 27^th September, if the application is received by 12^th October the loan will be paid in the first two weeks of November.  Letters will continue to be sent out as eligibility is confirmed.  If the October application deadline is not met, payment will still be made but the Scottish Government cannot guarantee it will be made in November.

Once applicants’ 2016 BPS claims have been completely validated and are ready to pay, the amount paid under the NBPSS should be deducted from the BPS payment due, and claimants will receive the balance.  Although it is called a loan, there will be no interest payments.  There are strict rules regarding EU advance payments and the 2016 validation process will not have progressed enough to allow Scotland to use EU funds and therefore the scheme will be supported through domestic funds.  It rather begs the question of how this ‘loan’ scheme fits in with EU rules, especially on State Aid.  The answer appears to be that only the interest element (paid by the Government) counts as aid.   Businesses that have received large amounts of other grants over the last three years are required to ensure they don’t breach the €15,000 limit.  A full Q and A on the scheme can be found at – https://www.ruralpayments.org/publicsite/futures/topics/all-schemes/national-loan-schemes/loans-for-2016-17-payments/

It does seem rather worrying after all this time that Scotland’s payment system is still not ‘fit for purpose’.  We understand that it will be early 2017 before the IT fix will be available to finish the validation process off.  But at least this has been recognised early this year and farmers and crofters should have some help with cash flow going into winter.  It has to be remembered that some are still waiting for their 2015 payment, the majority are expected to have been received by mid-October.