A European-wide review of the Single Farm Payment system claimed that payments often go to people who have little to do with farming and warns the subsidy payment system has “become divorced from current farming conditions”.

It states that in the UK some individuals are paid more than 1m euros a year without having any agricultural activity on their land.

The review, carried out by the European Court of Auditors, recommends that increased aid should be given to more “active farmers” while large-scale landowners should receive reduced payments.

Its authors also call for clearer definitions of land eligible for subsidies and of farming activities.

National Farmers’ Union director of policy Martin Haworth said “We also agree that payment entitlements should be held, activated and paid only to active farmers but recognise that this is very difficult to translate into concrete rules without increasing bureaucracy for farmers and paying agencies.”

Mr Haworth said capping or scaling back direct payments to the largest farmers would, however, be a mistake and called for a system which “allows our farmers to be more market focused and less reliant on support in the future”.

But Stuart Agnew, the UKIP’s spokesman on Agriculture and an MEP, calling the Single Farm Payment system “a licence to print money for a small number of large scale operators, while the vast majority of smaller scale beneficiaries receive only very limited aid”.

Meanwhile, the new boss of the British agency charged with administering Single Farm Payments, has pledged to put things right after years of mismanagement. Mark Grimshaw, chief executive of the Rural Payments Agency, told a NFU Council meeting that he was there to stay by taking on the role of a permanent Defra director.

He said: “I recognise that one of the key failings of the RPA in recent years was the lack of permanency in the leadership. I have appointed a customer director for the main board of the agency – putting the customer at the heart of everything we do starts at the top.”

“We have listened to criticism and we are putting things right, we will be making some real improvements over the next few years. There will be no sugar-coating of the tough issues, I will ensure everyone at the RPA delivers.”

He announced he would be working on a five-year plan for the agency, talking to farmer representatives and organisation as part of the process.

He refused, however, to set payment targets for the agency for the forthcoming year.

“I’m not in a position to commit to specific targets,” he said. “But we’ll be setting realistic expectations for our customers based on feedback and discussion with stakeholders. We want to start to put the legacy issues behind us while keeping the European auditors on side.

“We will aim to resolve outstanding issues on complicated claims much earlier.”

Elsewhere farmers are being warned today the RPA will be effected by industrial action planned by the Public and Commercial Services Union.

In a statement the RPA said: “This action is likely to be most keenly felt by farmers calling our Customer Service Centre. We won’t know the extent of the industrial action until Thursday. However, indications are that the centre will continue to offer a limited service.”