CASH-STRAPPED farmers have welcomed a damning Government report into a payment scheme that left thousands struggling to make ends meet.

Farmers across York, North and East Yorkshire have been hit by a string of blunders at the Rural Payments Agency (RPA) - leaving many entirely reliant on bank loans to survive.

Sir John Bourn, head of the Government watchdog the National Audit Office (NAO), said delays in paying farmers were "unacceptable" - and "unpicking what has gone wrong will take some time".

The NAO did a survey of farmers - and found that 20 per cent said the delays in payments had caused them distress and anxiety.

But cattle and arable farmer Derek Watson, of Knapton, near Malton, said: "I think that figure is wrong - it's more like 98 per cent. I don't know a single farmer who hasn't had problems because of late payments."

National Farmers' Union (NFU) official Rosey Dunn, who farms at Stockton-on-the-Forest, said: "The new payments scheme is a pan-European one, and other countries have managed to pay their farmers - but our Government has failed miserably. All power to the NAO for reinforcing what we have been saying."

Mrs Dunn said some farmers had still not been paid for 2005, and 2006 payments were not now expected until 2007. The delays had caused cash flow problems, anxiety, and unfair competition from farmers in Scotland and elsewhere in Europe, who have been paid.

Mr Watson said: "The NAO report only tells us what we already knew. Farmers have no confidence in the RPA whatsoever. It has shown absolute incompetence."

Conservative MP Richard Bacon, a member of the Commons Public Accounts Committee, said: "The RPA has failed England's farmers, a substantial number of whom have faced real hardship and distress as a result of this shambles.

"What's more, there is little chance things will be put right in time to deal with this year's claims."

NFU president Peter Kendall also warned this year's payments looked likely to be missed again.

At Question Time in the House of Commons yesterday, Prime Minister Tony Blair said: "As we have said on many occasions, we are sorry for the delays that there have been.

"There are now 97 per cent of farmers who have received full or partial payments.

"The RPA are in contact with the remaining high value cases and are working to pay the remaining claims as soon as possible."