The Government has denied generating millions of pounds in interest by delaying new grants to farmers.

Ludlow MP Philip Dunne claimed the Government was making more than £17million in interest from the £1.5bn in European subsidies.

In a written parliamentary question, the Conservative MP asked what the Government was planning to do with the interest.

Farmers in other member states, including Wales, received their Single Farm Payments this month, but farmers in England were told they would have to wait until February at the earliest due to problems with computer systems at the Rural Payments Agency.

Mr Dunne said: "My understanding is the Government has got the money. It is unfair to withhold payments, which in most cases is months rather than weeks.

"These late SPS payments could lead to some farmers not being able to meet payment obligations due.

"Is the Government/DEFRA looking to reimburse the farmer for interest foregone or overdraft charges incurred, or planning to use the interest to employ extra or better qualified staff to sort out the DEFRA problems that are holding up payments?"

A spokeswoman for the Rural Payments Agency said: "There is no interest, we don't make money by not making the payment window. The funds are due to be paid to us by the European Commission."

Meanwhile farming groups fear there could be further delays after the RPA sent out letters several days ago to farmers who had already submitted maps and forms claiming they had not sent their details.

The RPA said 5,200 farmers have not submitted Ordnance Survey maps to support their claims and therefore would not receive their grants.

Any further delays in payments would force many farmers into financial hardship, the NFU and Country Land and Business Association warned.

The Single Payment Scheme was introduced as part of Common Agricultural Policy reforms, with cash given to farmers for the amount of land they farm rather than how much they produce.

Frances Beatty, regional director of the West Midlands Country Land and Business Association, fears the Government may further delay payments due to problems at the RPA.

She said: "Going on the experience of their performance to date, and you only have to look at the chaos at the whole thing to have a view that farmers are going to be less than convinced at RPA to meet the latest deadline.

"Farmers are going to be in the most dreadful situation unless they do sort out these problems.

"It is a cash flow situation and goes back to the question of who benefits from the interest."

Charlie Morton, policy advisor for the NFU West Midlands, said: "The target is still officially February 14 but I do think it is quite possible it will slip but they are not saying at the moment.

"Farmers are in absolutely dire straits.

"There is a massive problem and although the banks have largely been supportive it is really small farmers who are most likely suffering because they don't have agricultural bank managers and instead have high street bank managers who don't know what is going on."