Delays in implementing a bespoke IT system led to the Rural Payments Agency (RPA) failing to pay subsidies to farmers on time, according to a National Audit Office report.
The RPA project to deliver a system capable of processing subsidy payments was beset by development problems. Implementation costs were expected to be £75.8m, but had reached £122.3m by the end of March this year.
The system that was delivered lacked the ability to provide management information.
The RPA had originally set a deadline of December 2004 for work on the system to finish. However, by December 2004 the RPA had identified 23 changes that needed to be made to the system to take account of changes in European Union regulations and actions by the UK government.
Once the changes had been made, the RPA also had to process more farmer payments than previously, with 120,000 payments due rather than 90,000.
The EU has since fined the UK government for failing to pay subsidies to farmers on time.