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11:00 - 26 April 2004

A Westcountry farming contractor owed 1.2 million for vital work carried out during the foot and mouth crisis has finally been paid, after a "nightmare" three-year battle with the Department of the Environment, Food and Rural Affairs.

Luke Furse Earthmoving Ltd, of Clawton, near Holsworthy, finally settled its contractual dispute with Defra following mediation. Although the precise terms of the deal are covered by a confidentiality agreement, the firm said it was "very pleased" with the outcome.

Defra, which has previously hinted that unpaid contractors were suspected of "wrongdoing", also agreed to issue a statement praising the firm's work. "Defra wishes to record formally its thanks to Luke Furse for its contribution during the foot and mouth outbreak," the department said.

The settlement was hailed as a major victory by small business campaigners who claim that Defra has used heavy-handed tactics and spurious excuses in a bid to avoid paying its bills. Three years on from the crisis, Defra is still refusing to pay bills totalling more than 50 million.

James Meyrick, of the Forum of Private Businesses, said many firms had been "put through the wringer" by the department. He said Defra's attitude made a mockery of the department's commitment to settle its bills within 30 days.

Mr Meyrick said: "You can hardly imagine how bad it has been for some of these firms - it has been a nightmare. The time taken to settle these bills has been ridiculous and some of the behaviour adopted by the department has been disgraceful. In some cases firms have gone to the wall before they have been paid."

Tory small business spokesman Henry Bellingham, who raised the case of Luke Furse in the Commons in January, described Defra's behaviour as "diabolical".

He added: "It is completely unacceptable that it has taken this long to settle disputes. These contractors worked tirelessly, often taking substantial risks themselves, to help the Government bring the crisis under control and they have been treated disgracefully."

Luke Furse Ltd played a vital role in the massive operation to contain foot and mouth in the Westcountry during the 2001 crisis. The firm built more than 40 pyres for the disposal of carcasses in Devon, procured huge quantities of equipment and services and carried out exhaustive cleansing and disinfection work at hundreds of Devon farms that were slaughtered out. During this time the firm saw its workforce rise from a typical level of under 50, to more than 300 at times. But by the summer of 2001 Defra began to refuse payment.

Luke Furse, who founded the respected family firm 25 years ago, told the WMN earlier this year that he was "distraught" at the treatment by Defra. He said that although all payments had been agreed at the time his firm had since been subjected to a barrage of questions and repeated audits as Government accountants attempted to chip away at the bill. At one point the firm was told that the Government had "lost" invoices totalling almost 500,000.

Defra declined to comment in detail on the case. But earlier this year the Rural Affairs Minister Alun Michael said the Government had a duty to protect the public purse and investigate claims.