Rural Economy and Connectivity Committee

Meeting date: Wednesday, December 2, 2020

Official Report 691KB pdf

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Implications of Brexit (Rural Economy)

Welcome back to those who were already here. Further to last week’s session with the UK Secretary of State for Environment, Food and Rural Affairs, the committee will take evidence on the implications of Brexit for the rural economy from Fergus Ewing, the Cabinet Secretary for Rural Economy and Tourism, who is assisted by John Kerr, head of the agricultural policy division, and Allan Gibb, acting deputy director of sea fisheries, both from the Scottish Government.

I ask the cabinet secretary to make a brief opening statement. We have a lot of questions to get through and, as always, I am keen to have members’ questions answered.

Brexit will have a significant impact on Scotland’s rural economy and policy. The UK sheep sector depends heavily on exports to balance supply—about 30 per cent of production is exported, and the EU accounts for more than 90 per cent of that. We know the devastating effects that applying the no-deal 40 to 50 per cent tariffs are likely to have on the sector by resulting in a crash of perhaps 30 per cent in prices and jeopardising the future of many in the sector.

The sector is already financially fragile, which is why I pressed the UK Government hard to recommence work on the sheep compensation scheme. I am pleased that progress is being made to ensure that an appropriate scheme is in place for the end of the transition period.

On agricultural funding, during the Brexit campaign, pro-Brexit campaigners and UK ministers promised that farmers and crofters would not be worse off and that EU funding would be matched post-Brexit. The UK Government is not delivering on that promise. We now know that Scotland stands to lose out on £170 million of funding between now and 2024-25. That includes a failure to commit to delivering the £25.7 million of annual convergence payments beyond 2022 that were the subject of the Bew review, which was a process that committee members supported. In response to the Bew report, in September last year, the UK Government undertook to work with the devolved Administrations to agree a fair funding allocation model for agricultural support, but I am afraid that no such discussions took place.

On fisheries, UK ministers have conceded that there will be trade friction and possibly tariffs. The salmon industry could face costs of £9 million annually. The UK Government must meet its commitment to prioritising seafood exports at the border to avoid spoilage.

Details from the spending review on fisheries funding are scarce. The allocation to Scotland seems to be based solely on 2014 funding levels, with no reference to the increases in the European maritime and fisheries fund allocation or even to inflation. In good faith, we entered into the process that the Department for Environment, Food and Rural Affairs set out for engaging with HM Treasury on the level of need for the sectors. That long process, which was led by economic analysis, identified a funding requirement for Scotland of £62 million. HMT seems to have totally ignored that; I have had no detailed reply from the UK Government.

On labour, the end of the transition period will bring an end to the free movement of people. That could have a devastating impact on Scotland’s soft fruit and seasonal vegetable sectors, which rely on seasonal workers. I am also concerned about the seafood processing industry, which depends heavily on EU labour. In the Grampian region, 70 per cent of that industry’s workforce is from the EU.

I have sought to be brief and I am happy to end my introduction there so that I can answer questions from the convener and committee members.

I remind all members to keep their questions succinct and I ask for similar answers. In that way, I can get through all the questions from members, which is always my intention.

As the cabinet secretary knows, in January 2019, Parliament unanimously agreed to request that the Scottish Government set up the farming and food production future policy group, which is an opportunity to develop our own policy, post 2024, and the Government did so. This week, the UK Government came forward with its view of the future for south of the border, post 2024. I know that the cabinet secretary’s view is that Scotland’s policy group is independent, which it is, and that he cannot interfere. However, can he use all his good offices, not to interfere—I am not asking him to do that—but to encourage and, more importantly, to facilitate that group to report to him as soon as is practical?

Yes, we have been seeking to do that, and I hope that our efforts will shortly bear fruit. Mr Rumbles was, in one sense, the architect of the group, and I am grateful for that.

However, we have not just been waiting for the group to report. As members know, in our programme for government, we have committed to taking forward farmer-led groups for devising new approaches to farming in the future in Scotland. Members will also be aware of—and, I hope, familiar in principle with—the outcome of the report on suckler beef farming by Jim Walker, the former NFU Scotland president, which recommends improved practices to address climate change issues and reductions to methane emissions. I am pleased to say that that work is now going forward. Jim Walker and I chaired the first meeting of the programme board last Thursday. The second meeting will be in a couple of weeks, and the group is due to report in February. A group on arable farming is being convened, with the pig sector industry leadership group taking on that role, and I am working on establishing groups for dairy and hill farming.

All of that addresses Mr Rumbles’s point and shows that I have a clear vision for the future of Scottish farming. I have enunciated it recently, and I will do so briefly now. It is that we combine high-quality food production with the pursuit of high environmental standards, and that we reward our farmers, crofters and land managers by continuing to provide them with a reliable and sufficient income, but with conditionality. Continued income for what they do—producing food—requires compliance with high environmental standards, especially to meet our climate change targets, but also having regard to biodiversity. That is my vision, convener, and I hope that it is shared by you, by Mr Rumbles and others. I am working on groups with a farmer-led focus to secure practical solutions as well as the buy-in of the various sectors of the farming community. I am confident that that will be a substantial element of our way forward. It will not be everything, because we also have forestry, peatland and change in land use patterns to deal with. However, I am confident that I see a clear way forward for Scotland, if, of course, our vision is shared by the electorate in a few months’ time.

I agree with the vision of how we need to proceed, but, as I understand it, the farming and food production future policy group was meant to be an overarching bringing together of all the sectoral elements. I appreciate the work that has been done on the sectoral elements, as the cabinet secretary has outlined, but it is really important—and I think that Parliament would expect—that the group needs to report on that overarching view fairly soon.

I know that the group’s membership includes Scottish Government officials. I am not suggesting that the cabinet secretary should say when the group should produce its report, because that is not his remit, but it should be facilitated. If there is a blockage so that it cannot produce its results sooner rather than later, could the cabinet secretary use every ounce of the facilities of his office to ensure that any barriers to the group producing its report are removed?

Please be brief, cabinet secretary.

I do not think that they are really any barriers. As Mr Rumbles has rightly said, it is an independent group and I have to be wary of being seen to exert any pressure that might be regarded as inappropriate.

I offered views to the group. It has taken further soundings from Mr Walker and others, including the 1.5 degrees study and Dieter Helm. Things have moved on because of Covid, so the group wanted to get more evidence. To be fair to it, I think that that was reasonable, rather than it just relying on a pre-Covid approach. I will see if there is anything that we can do in practice to get that moving forward.

As I think is right for Government, we have not taken the view that we would just do nothing and wait for the report to come along; we have taken the view that we have to get on with it. Members have been urging me to do that, which is what we have done: we have got on with the farmer-led groups.

We also have a duty to bring forward a climate change plan. I have not been working in isolation to produce that plan; I have been working on it closely with my friend and colleague Roseanna Cunningham and I believe that it is likely to be considered relatively soon. That plan takes the overarching strategic approach, which Mr Rumbles rightly says should be part of our response.

How has the UK Government worked with the Scottish Government to ensure that Scottish interests are represented in the on-going future relationship negotiations?

We have had, and I have participated in, many meetings with the UK Government. I have always sought to have a constructive relationship with the four DEFRA cabinet secretaries who have come and gone, including George Eustice, the current incumbent. It is not unfair to say that that engagement has not been meaningful. We have not been involved in any of the negotiations that we sought to be involved in, especially those on fishing, which we will come to. We have not been in the room to discuss that, and although we asked for it specifically and although Mr Gove said that he would consider our request carefully, he never got back to me.

We have not been involved in discussions about trade and the terms of reference for various committees. In general, there has been courtesy, a lot of interchange and work on frameworks, but we have asked to be part of the really big decisions as a sort of partner but I—[Temporary loss of sound].

I do not know if the cabinet secretary has frozen or if it is his internet connection. Are you there, cabinet secretary?

Angus MacDonald, the cabinet secretary appears to be back with us.

Unfortunately, I did not hear the full response from the cabinet secretary. Perhaps he could cover the second half of his response when he answers my next question.

As the cabinet secretary knows, George Eustice gave evidence to the committee last week. What on-going engagement is the Scottish Government having with the UK Government on the impact of any outcome of the negotiations on the committee’s remit? For example, the secretary of state suggested that proposals for support for the sheep sector have been developed; the cabinet secretary may have referred to that in his opening remarks. Unfortunately, George Eustice was unable to share any detail and he said that it would be released further on in the year. Has the Scottish Government been involved in developing that strand of support, and have the details been shared with the cabinet secretary?

11:00  

Yes. It is fair to say that I have pressed the issue personally over the past several years. When previously we were looking at the concerns about a Brexit no deal, I pressed the issue with Michael Gove and he undertook that there would be a compensation scheme throughout the UK if there was a no deal and tariffs at 40 to 50 per cent were imposed on our EU exports, which form a significant part of the total, because of fear of price collapse. Those proposals were developed but were never ratified by the Treasury. I asked Mr Gove at one of the meetings, “How can we have absolute certainty that in a disagreement between yourself and the Treasury, the farmers will win and there will be a sufficient sum of money to compensate sheep farmers throughout the UK?”; and he said “We will win.” That is what he said. However, as I understand it, the Treasury still has not committed to a specific figure.

To be candid, I think that we all want to avoid a situation where there is a no deal. That would be a disaster. Brexit is bad enough, but Brexit without a deal is utterly catastrophic, so I do not want that to occur. However, we are very close now and it is a matter of weeks until the end of the transition period, so the scheme needs to be finalised between the devolved Administrations and the UK Government. We are not quite there yet, although there has been a reasonable amount of work on that at my instigation at the interministerial meetings, where I have pushed it with support from Wales and Northern Ireland.

Last week, the secretary of state was bandying about the figure of £200 per head for ewes; and I think that he also mentioned £300 at one point. Obviously, we do not want to get farmers’ and crofters’ hopes up if that is the figure that is being looked at, but certainly as soon as the Scottish Government is aware of the details it would be helpful if it could be shared with the committee.

I will take that away as a specific request. Obviously, convener, I do not want to start breaching confidences, so I will need to go away and check that. However, I will take that as a serious request from the committee and I will get back to the committee as quickly as I can on that.

Thank you.

Just for clarity, Angus, I think that the figures that the secretary of state was talking about at that stage were payments in relation to sheep that could distort the internal market, so I think that we need to be careful about those figures. It would therefore be helpful, cabinet secretary, if you could clarify that.

Emma Harper has the next group of questions.

Good morning, again, cabinet secretary. We have heard evidence in the Parliament chamber as well as in committee about significant issues with being ready for the end of the Brexit transition period on 1 January, especially with moving produce through ports such as Cairnryan, in the south-west of Scotland. I am interested to know what work the Scottish Government has done to support the movement of produce from Scotland into Northern Ireland and vice versa. We have heard that 25 extra vets will be needed at Larne and Belfast as well as more administrative staff. I am interested to know what work is being done round about Cairnryan in particular. I will probably also have some supplementary questions.

I will let you in with the supplementaries, Emma, but the question is about letting everyone else in as well. Short answers and short questions always go down well. Over to the cabinet secretary.

Emma Harper is right that there will need to be more vets and other staff. We are working on that and a lot of detailed work is going on, but I do not have time to go into it. However, the basic problem is that the UK Government has yet to communicate the requirements of the Northern Ireland protocol regarding how trade is to be regulated between Great Britain and Northern Ireland, bearing in mind that many of the goods that come from Northern Ireland have come from the Republic of Ireland. That raises a series of complex issues that I am afraid have not been resolved.

We in the Scottish Government think that there should be a border control post at Cairnryan and we have made that view clear to the UK. Of course, the UK should be funding a border post that is necessary only because of Brexit. The UK has created the need; it should pay for the costs. All those matters have been left very late, but we are seeking to work with the UK Government and Edwin Poots of the Northern Ireland Administration. Basically, we want frictionless trade to continue between Scotland and Northern Ireland and, indeed, the Republic, but there simply has been no proper consideration of the necessary preparatory work, including the establishment of a border control post, which will require a new building. Planning permission must be obtained before the construction of the new building, but there is not enough time for that.

Whatever arrangements are required, there will need to be a transitional period during which any changes can be considered properly and the necessary measures taken for increased numbers of vets and other staff dealing with the health certificates and phytosanitary certificates to be recruited just to deal with the trade. The worry is that if we do not have that, we might lose out in Larne, Stranraer and the south of Scotland, which Emma Harper represents. I am pleased that she has, quite rightly, raised this important issue today in order to stand up for the interests of the south of Scotland.

Thank you, cabinet secretary, I will be brief, unlike last week. The cabinet secretary talked about the health certificates and other matters. Obviously, there will be issues with the digital infrastructure as well, but I am also interested in how the dairy supply chain will be affected. You mentioned earlier that a dairy stakeholders group is being developed, but there will be issues with the movement of our dairy produce, and the producers, the processors and the whole supply chain will be affected. There are big processors in the south-west of Scotland that move produce back and forwards between there and Northern Ireland, and between there and the south of Ireland. I am interested to hear your thoughts on how the dairy supply chain will be impacted after 1 January. Is it ready?

I do not mean to be political, but the necessary arrangements have not been put in place for the dairy sector or the lamb sector. Nearly 10,000 lambs are exported to Northern Ireland for breeding purposes, and that has been going on for years. However, there is now a problem with testing for scrapie, whether exports can be permitted in accordance with the EU rules, and whether that has even been raised in the negotiations.

There is a meeting of the IMG on Monday and I will raise those issues with Mr Eustice at that meeting. In fact, I discussed some of them yesterday with NFUS’s Andrew McCormick, from the south of Scotland. I cannot speak for him, but I think that NFUS has also expressed its concerns about some of those issues.

Thank you. I am afraid, Emma, that we will have to move on to questions from other members. Richard Lyle now has some questions.

Not that I noted. I am down for question 14, convener. Anyway, I will ask my questions. The secretary of state outlined the UK Government’s commitment to maintaining the level of funding for agriculture and stated that Scotland would get £595 million per year throughout the current parliamentary session for pillar 1 and pillar 2. Does that provide the Scottish Government with the funding guarantees that it requires to set out longer-term plans for future policy?

I am afraid that it does not. I set out in my opening remarks that our analysis points to the fact that there will be £170 million of cuts by the UK Government, compared to the funding that we would have received had we remained in the EU. I make it clear to committee members that that is a serious matter. As Mr Lyle has rightly said, it is not possible for me to finalise all future spending plans without knowing that the money is there. The final point that I will make about this, because I do not want to go on, is an important one.

Those concerns are shared by the Welsh and Northern Irish Administrations—it is not only the Scottish Government that is seeking restoration of the cuts and a review of the decision that was made by the HMT without reference to the devolved administrations. Scotland, Wales and Northern Ireland jointly have expressed our profound concern at what appears to be a violation of the trust that was engendered by the promises that were made during the Brexit referendum that EU funding would at least be matched.

In that respect, Edwin Poots, Lesley Griffiths and I have been as one in raising those concerns with George Eustice. We continue to do so and will do so on Monday. If the UK Government wants to argue that it is being fair to the devolved Administrations, surely it has to match the EU funding. That was the promise that was made during the Brexit referendum. Had that promise not been made, I wonder if Britain would have voted for Brexit.

That could not be more serious, convener. I assure the committee that I will pursue pursuing Scotland’s interests and those of the rural economy as a matter of paramount importance during the weeks and months ahead, with the objective of restoring the funding that was due to Scotland and that we would have received had it not been for Brexit and the UK Government’s policies on that.

What is your view of the suggestion that Scotland will lose £170 million in funding due to the UK’s exit from the EU against our wishes?

I think that I have answered that question. It is extremely serious and it is unacceptable. It is a matter of fact that that is the cumulative amount in cuts. It is not only Scotland. Wales is similarly affected and Northern Ireland is—[Temporary loss of sound.]

We have lost the cabinet secretary. Can the cabinet secretary hear me?

I will suspend the meeting briefly as we try to re-establish contact with the cabinet secretary. I ask committee members to remain where they are.

11:13 Meeting suspended.  

11:19 On resuming—  

I reconvene the meeting and welcome everyone back. That break came at a bad moment, as we were already up against the time for answering questions. There are still a lot of questions to go.

I will come back to Richard Lyle, because I am not sure that he got the full answer to his question. He might have other questions that he could put succinctly to the cabinet secretary.

I apologise, convener. I did not receive the email with the updated questions.

Does the Scottish Government have a clear understanding of how the new Trade and Agriculture Commission will operate in relation to Scotland, and how it will represent Scotland’s interests?

The short answer is no, we do not have sufficient clarity. That is a relatively new venture, but it has been set up in part to meet the concerns about cheap imports flooding the UK market and undercutting primary food producers in Britain. Many farmers are worried that there is a risk that trade deals will be made with countries that do not necessarily have the same high environmental and animal welfare standards that apply in the UK. The Trade and Agriculture Commission has been set up as an attempt to look at those issues, but I do not think that it is an effective answer to the fears and concerns that exist.

Time is short so, rather than use up more time now, my officials can write to the committee with a little more detail on our concerns about the formation and remit of, and the representation on, the commission.

We will take up the cabinet secretary’s offer to come back to the committee on how he sees Scotland’s interests being reflected in the Trade and Agriculture Commission.

My question is about the UK Withdrawal from the European Union (Continuity) (Scotland) Bill, which would provide the Scottish ministers with the power to ensure continued alignment with EU law. Does the cabinet secretary have a view on the secretary of state’s comments to the committee last week that keeping pace is a strategy that

“cannot be maintained in the long term, because it is only a matter of time before the EU introduces a policy proposal that would be manifestly against Scottish interests. It then becomes a moot point: do you elevate the pursuit of EU law above the interests of Scotland?”—[Official Report, Rural Economy and Connectivity Committee, 25 November 2020; c19.]

I would welcome the cabinet secretary’s comment on that point.

The two worries that we have are that, although the regulation that is generally applied in the EU to the rural economy can appear to be cumbersome from time to time, it is recognised as necessary to maintain food production standards in processing and the way in which we look after animals in the UK. In turn, that is seen as essential by most retailers, because their customers expect that they do not buy food from countries that are mistreating animals and so on. Customers also want high levels of sustainability on the marine side, for example.

My worry is that, if we start abandoning those high standards—and George Eustice has made no secret of the fact that he wants to do that—we may be causing real commercial damage very quickly, because retailers will not change their standards. In turn, that could threaten our export market to Europe, because it will not be happy if we lower our standards and we will therefore set much of our exports at risk.

My second concern relates to the powers that we have over fishing and farming, which are at serious risk of being predated by the UK Government. I am already seeing early signs in fishing that that is happening, and that UK officials seem to think that it is for them to take decisions on devolved issues. I will raise that with George Eustice on Monday. I am extremely concerned about that.

To answer Peter Chapman’s question, those are the two main concerns that I have.

Your concerns are predicated on the belief that we would be lowering standards. Can you not understand that, often, animal welfare and environmental standards in the UK are ahead of those in the EU? I do not understand your argument that we are focused on lowering standards.

The reason why I am concerned about that is that members of the Conservative Party and serious members of Government have made comments to the effect that they are intent on reducing what they see as red tape and bureaucracy. It is members of Mr Chapman’s party who have caused me to have those concerns. Various utterances that I could quote—but which I will not quote, because that might be using up time to delve into political matters—cause me to believe that concerns are real. Members of the UK Cabinet have clearly indicated that they want to reduce standards across a whole area, because they see them as inappropriate. I think that my concerns are grounded in fact.

We will move on, cabinet secretary.

What has been the nature of the engagement between the UK and Scottish Parliaments on the future fisheries agreement with the EU and on co-ordination on fisheries matters across the UK?

I should say, first, that there has always been a good relationship between officials. Arguably, they work more closely together than most, if not all, other officials, because of the annual fishing talks in Brussels—where, incidentally, in many years we secured quite a good outcome for the Scottish fishing sector.

Unfortunately, however, the relations with the UK Government have not followed suit. Despite repeated requests, Scottish Government officials were denied the opportunity to participate in the talks about a future fisheries agreement. I made that request directly to Michael Gove at a meeting that took place in Buckie not so very long ago. He said that he would think about that request, but we never heard back from him on that. That is despite the fact that Allan Gibb, who is here today to give evidence if required, is regarded in Europe as—if I can say this without embarrassing him—one of the foremost exponents of negotiation and expertise on the technicalities of the fisheries negotiations. Despite his expertise and knowledge, and the trust that he has built up over many years with the leading players in the fishing industry in Scotland, he has been kept out of the room, and has simply been briefed about what has taken place in the room afterwards. I think that that is a missed opportunity in terms of getting the best deal for Scotland.

The risk in the next couple of weeks is that some last-minute shady deal is done by Mr Frost or whoever on the UK side without reference to Scotland and with unforeseen and unintended adverse consequences for Scotland.

On a ministerial level, I am afraid that there just has not been engagement. That has also been the case with third-party negotiations—those with Norway, the Faroe Islands and Iceland. We have been cut out of those negotiations. That is a foolish approach because, frankly, the Scottish officials have the knowledge about Scottish fishing interests. I am afraid that the UK officials just do not have the same degree of knowledge, probably because it is not their direct responsibility and, therefore, they are not as familiar with the highly complex issues that are involved. That is extremely unfortunate and potentially very damaging.

Thank you, minister. However, I have to say that, because of the length of that answer, I cannot bring in two members who want to ask questions. I ask everyone to be mindful of time, in the interests of other members. Colin Smyth will ask the next question.

11:30  

I turn to two important pieces of UK legislation—the Fisheries Bill, which last week became the Fisheries Act 2020, and the United Kingdom Internal Market Bill.

The Fisheries Act 2020 replaces article 17 of the common fisheries policy with the national benefit objective. How does the cabinet secretary foresee that being different? What criteria will the Scottish Government use for that objective to ensure that fishing opportunities are distributed to those who deliver the best socioeconomic and environmental objectives?

My view is that the Fisheries Act 2020 produces a framework which, although not perfect, is workable. That is not really the issue.

The issue is that the early signs are that, in the discussions that are taking place and the work that is being done to work out a bilateral deal, DEFRA seems to be taking on the mantle of being, if you like, a new Commission, instead of it being a partnership of equals. We should bear it in mind that Scotland’s fishery is much more valuable and far bigger than the English fishery. Despite that, the early signs are that the UK Government seems to regard itself as the boss—the Commission, if you like—which is seriously worrying for me.

On the technical matters, I do not know whether Mr Gibb could have the opportunity to come in. I am sorry that we lost so much time when the BlueJeans system apparently failed, but I think that it would be useful if, at some stage, Mr Gibb could give his comments on those matters.

I am happy to let Mr Gibb come in, but I caution people to be mindful of the fact that we want everyone to get a crack at participating in the session.

Thank you, convener. I will be brief. I will add to the cabinet secretary’s remarks by pointing the committee to the future fisheries management process that we are going through. We have made it clear in our strategy that we will look to allocate fishing opportunities and any additional—[Inaudible.]—in a way that ensures that it—[Inaudible.]—active fishermen will benefit across all communities in Scotland, allowing for—[Inaudible.]—employment opportunities—[Inaudible.]—at the heart. That is how we will—[Inaudible.]—the article that Mr Smyth referred to.

That was not entirely satisfactory, because you broke up all the way through that answer.

Cabinet secretary, we can try to bring in Mr Gibb at a later stage, but it looks as though you might be on your own for a bit.

Given the internet problems, perhaps it would be helpful for the Government to write to us on the national benefit objective.

You mentioned that the Fisheries Act 2020 is not perfect. Does the Government plan to use the UK act to manage Scottish fisheries in perpetuity, or are you still committed to adhering to your party’s manifesto commitment to introduce a Scottish inshore fisheries bill? I appreciate that that will not happen in this session of Parliament.

As a small aside, how will Parliament debate fisheries issues? We are used to having an annual fisheries debate at this time of year. As a Parliament, how will we debate such important issues in the future?

Mr Smyth raises a number of very fair points. It is up to Parliament how it wishes to conduct proceedings, but I expect that there will be—there must be—opportunities to debate fishing in the future. Indeed, I very much hope to make a ministerial statement on fisheries management and our analysis of the consultation that we carried out on our discussion paper. Mr Gibb alluded to some of those proposals, and there are many others.

Fishing is devolved, and it must remain devolved. We must make decisions on fishing in Scotland. Obviously, we will work with the UK Government, but the early signs are that DEFRA seems to be taking on the role of the Commission and acting as a unilateral arbitrator on domestic management decisions, which completely cuts across devolved competences.

On the inshore matter that Mr Smyth mentioned, it is fair to say that, after the interruption caused by Covid, the installation of remote monitoring equipment is now beginning to be delivered, and that will address many of the serious issues that have been raised with parliamentarians about inshore fisheries. We are committed to helping local management of inshore fisheries to build on the efforts that have been made already. When the local management arrangements work, they work very well and there are good examples of that. I meet representatives from SEPA regularly, and I also meet well-respected fishing leaders who represent their communities. That practical work, particularly the REM delivery, is probably more important in the short term.

We have also established a nephrops task force because of the serious problems that the prawn sector is facing, and because of the loss of the brown crab market in China. We have also delivered compensation and financial support during the Covid crisis to fishing interests, starting off with those with the smaller boats. We have made a fair effort to provide businesses with a lifeline so that they can get through. It is fair to say that the inshore shellfish sector has been most adversely affected during Covid, and it is also worried about the loss of the absolutely essential European markets because of Brexit.

I will turn to the United Kingdom Internal Market Bill, cabinet secretary. As you know, clause 3 of the bill on mutual recognition provides that goods that are produced in Scotland or imported to Scotland, for example, can be sold to any other part of the UK without having to adhere to requirements or regulations in that part of the UK. Under the non-discrimination principle, that means that a producer in Scotland should not be affected by regulatory requirements elsewhere in the UK. How will that impact on the Government’s pursuit of its rural policy objectives? Last week, the secretary of state told the committee that he believes that the looser regulation would be beneficial to Scotland.

We are worried that the internal market bill will open the door to a race to the bottom on food and environmental standards. I have said that already. We are also concerned that the non-discrimination principle of the bill will constrain our ability to make devolved choices. I could give examples, but it would take too long. There are some technical aspects to it and I would be happy to share more of them with the committee in writing, as time probably does not permit now.

The overriding concern is that, as the UK announced yesterday that it wants to stop paying farmers to grow food, and as in Scotland we think that farmers should earn our financial support, not subsidies, for the hard work that they do in producing food as well as caring for the environment, there is now a clear divergence between Scotland and England. England wants to abandon farmers as food producers; we do not. We want to value them and recognise them—

Cabinet secretary, I have given you a huge amount of leeway. As you know, agriculture is devolved and it is for the Scottish Government to sort it out. It is not therefore entirely helpful for you to go into the political issues like that.

As Colin Smyth has finished his questions, I will move to the deputy convener, Maureen Watt, who has a series of questions.

The committee heard from the UK Government that there will need to be a stated framework to address potentially market-distorting subsidies, but that will principally be dealt with through the common framework. What is your view of such a state aid framework? Are you confident about the ability of the Scottish Government to run an agricultural support scheme that is tailored to the needs of the Scottish agricultural sector within UK state aid rules?

As I understand it, the provisions of the internal market bill mean that UK ministers could put in place new subsidy controls that would make unlawful payments that we would otherwise have been able to make. That could have a negative impact. A one-size-fits-all framework for agricultural support, to which I just alluded, could prevent us from making payments to farmers that, in my view, represent the value that they provide to society.

I am worried in particular about our ability to continue with LFASS, or some variant of it, for the hill farmers. Other parts of the UK dropped the scheme seven or eight years ago, so there are particular concerns in that regard. At present, it is difficult to be categorical about how everything will pan out. I am primarily concerned—this is not a political point—with the need for us to value the rural economy and continue to supply that funding. If the funding is not to be maintained in the long term, that will threaten many small farms and crofts, which rely on getting that financial support for the work that they do and what they produce for the country.

It has been recognised that there is a need for common approaches to maintain the UK internal market. What is the Scottish Parliament’s role in that process? How would we be able to scrutinise effectively? Is it possible that the United Kingdom Internal Market Bill could constrain the Scottish Parliament’s role? For example, if we were to disagree on a particular point in a devolved area, could the Scottish ministers bring forward separate legislation? Would that be permitted under the bill? In other words, would the bill be severely detrimental to the ability of the Scottish Government and the Scottish Parliament to make their own laws for Scottish agriculture and fisheries?

Those are risks. Whether they become realities, we must wait and see, but there are serious grounds to indicate that there are concerns.

We should bear in mind the fact that we have made different decisions in Scotland—I just mentioned LFASS, for example. Agriculture has been devolved for about 20 years and many of the decisions that have been taken here, such as supporting hill farmers, have not been implicitly controversial, but the same decisions would not have been taken by a UK Government.

There are real risks here. I do not want to be alarmist about it—my job is to get the best for the rural economy, whatever the wider macro picture is. However, my main concern is about finance, and my second is about our ability to shape our own policies in Scotland.

As for the Parliament, I think that it should stand up for its powers robustly. Michael Russell has been leading the campaign to raise concerns that the UK Government’s approach would result in predation of those powers. As I have seen for myself, that is not a fanciful worry—it is happening right now in fisheries. I will do my best to stop it and stamp it out right now. If I cannot do that, then—my goodness me—I would expect that the Parliament would take on the mantle very quickly.

I have one further question. We all know of the benefits that LEADER funding has brought for many rural communities. I understand, from last week’s evidence session with the secretary of state, that LEADER funding will now become a strand of the shared prosperity fund. We have not heard anything about that fund, but it seems that it will be able to fund anything and everything. At your meeting next week, can you get some more clarity on how LEADER funding will be replaced?

I should say yes, but I am not sure that I will be able to do so. I have been asking that question for the past three years and, so far, the only thing that we know about the UK shared prosperity fund is the four words in its title. There was supposed to be a consultation. The LEADER programme is essential for communities—I think that that is a cross-party view; we all know of examples on our own patches. The UK shared prosperity fund is becoming a sad joke. There is about as much evidence and factual information available regarding the UK Government’s plans for that fund as there is an evidential basis for the source of funding of Santa Claus’s largesse. [Laughter.]

That probably ends the session. I wonder whether, after that comment, Santa Claus will come and visit you—possibly not, I think. On the basis that we have come to the end of our questions, I thank you and Allan Gibb for attending the meeting, albeit that Allan’s internet connection let him down at the critical moment.