Ministers will have to pay over £22m to farmers to cover loans taken out to replace the missing cash and taxpayers could have to fork out a further £131m because the European Union is likely to disallow some of the sums that were paid out in such a chaotic way.

In addition, plans have been deferred for 1,800 job cuts at the agency in charge of payments. The failure to introduce a simplified payments scheme also cost the job of Johnston McNeill, chief executive of the Rural Payments Agency. The £114,000-a-year civil servant was suspended on full pay last March. The fiasco brings strong criticism from the head of the NAO and MPs on the Commons public accounts committee today.

In his report Sir John Bourn, head of the NAO, says: "In paring back the work required to get the single payment scheme ready on time the agency underestimated the effort involved in processing claims, but also left itself without the management information it needed to take control of the situation."

Edward Leigh, chair of the Commons public accounts committee, says the agency made "a pig's ear" out of paying the subsidy: "The dismal handling of the scheme should be recorded in a civil service textbook - as an example of what not to do."

Source: The Guardian