Rural Economy and Connectivity Committee

Meeting date: Wednesday, June 6, 2018

Official Report 829KB pdf

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Agriculture (Update)

Agenda item 2 is an update on agriculture. Given that we have had a brief suspension, I invite members to declare any relevant interests. I declare a registered interest as a partner in an agricultural partnership.

I own a small registered agricultural holding.

I, too, am a partner in an agricultural business.

We will take evidence on a range of matters relevant to the agricultural sector. I welcome back, from the Scottish Government, Fergus Ewing, Cabinet Secretary for Rural Economy and Connectivity. He is accompanied by Annabel Turpie, chief operating officer, Douglas Petrie, head of area offices and head of agricultural profession, Eddie Turnbull, head of information services and Andrew Watson, deputy director for agricultural policy implementation.

I invite you to make an opening statement, cabinet secretary. Due to the length of the last agenda item, I would like you to limit your statement to three minutes.

The past year has been particularly challenging for farmers and crofters, largely because of the impact of the weather. Starting with a wet summer, the total amount of rain increased relatively modestly, but the key issue was that the number of days on which rain fell increased dramatically, meaning that farmers and crofters struggled to secure their hay, silage and cereal crops. Everything was late and many farmers and crofters went into the winter period with far lower than normal stocks of feed and fodder, as I discovered on farm visits, as I am sure did other members.

Compounding that situation, there was severe weather from early March right through to early April, which had a bad effect on lambing and calving performance. It has been quite distressing to hear of the losses of stock that some have suffered, despite their very best efforts. Weather can be a cruel mistress.

The Scottish Government has not sat still and watched without taking action. Recognising that problems were being caused, I initiated the basic payment scheme loan scheme, with farmers and crofters receiving 90 per cent of their payments from the end of October—loans totalling £317 million. I am pleased to say that we started to make the balance payments on 3 April and we have completed 12,586 payments. We are on track to meet the regulatory target by the end of June. We have already made suckler beef support payments.

In November, I set up the weather advisory panel, which brings together experts to give practical advice on future resilience. The panel has met on five occasions and has promoted several initiatives, such as feed budgeting and rural and mental health. The panel will meet again at the Royal Highland Show.

As the poor weather continued into the spring and with reports of costs rising, I initiated the national LFAS loan scheme, with payments going out in the first few days of April to help support business cash flow. So far, 8,339 farmers have received £52.3 million. In addition, on 18 April, I announced a further package of measures, including £250,000 towards the additional costs of uplifting fallen stock and a £25,000 contribution to RSABI to support its role in providing confidential listening and support for Scotland’s farmers and land managers—RSABI has had a particularly important role as farmers and crofters have struggled with the impact of the weather this past year and I am pleased to support it.

I have convened an all-industry meeting to look at issues on feed and fodder as we go into the summer period, and that will take place tomorrow. Many farms’ fodder stores are exhausted, and planning now by the industry as a whole will be important for building resilience for later in the year. It is worth noting that we are the only Administration in the UK to provide such additional support.

Finally, at a meeting with Mr Hogan some weeks back, I secured from the EU Commission a full derogation, for a year, from the crop diversification rules for 2018 for arable farmers. Therefore, I hope that we have not been idle.

Thank you, cabinet secretary. Our first question is from Richard Lyle.

I want to ask about the CAP payments IT system costs. It is my belief that, due to various organisation requests and requirements, we ended up with a very complicated system. Last month, an article that appeared in a newspaper claimed that IT costs have risen dramatically. What is the cost of the system to date? Is the system now fully functional, so that it can pay farmers, on time, the money that they deserve?

The CAP IT costs have been substantial, but some reports have been exaggerated in saying that they are £250 million. However, as I have made clear, we are holding to the figure of £178 million to deliver functionality and the benefits of the system. During the financial year 2017-18 we have been closely monitoring costs and delivery from the former futures programme. My officials can provide more information on that if it is required. Mr Turnbull will be able to provide full information if committee members want to explore that in further detail.

You have answered my second question: the figure of £178 million is the IT cost. Have the recommendations that are set out in the technical assurance review on the ARE futures project been actioned, and is the report now in the public domain? Perhaps Mr Turnbull will want to answer that.

Good progress has been made, but Mr Turnbull can probably provide the committee with the detail.

I will not go into a great deal of detail, but the Fujitsu report is one example of a list of improvements that we have been working on. We have been using that as a template against which we have measured improvement. I will give the committee some brief examples. Committee members will recall that disaster recovery was called out in the Fujitsu report as something that we needed to address. It was also called out by the third generation of the Audit Scotland report. In December 2017, we successfully carried out a controlled disaster recovery test, which meant that we did not see the process right through to conclusion but could monitor it. However, in February we carried out an end-to-end recovery test, in which we switched over to our failover site. One or two issues occurred, but we will follow up on those and have another similar test in July.

Since the review, my objective has been to achieve stability in the service’s availability and also the deliverability of functionality on to the platform. Mr Lyle asked the cabinet secretary about the figure of £178 million. We have been monitoring that and the level of functionality that should be delivered against it, and I would say that we have achieved an acceptable level of stability. For example, during the single application form submission window the system was available for 99.47 per cent of the time. It does not operate 24/7, and we have to bring it down in order to implement changes during what we call controlled downtime. However, during that window we had six hours of unplanned downtime.

To answer Mr Lyle’s specific question about the Fujitsu report, I hold to the original statement that there was information that was commercially sensitive; it still is, and it is also security sensitive. I impress upon committee members how important it is that we do not put out in the public domain information about how our system works; members will recall that that was the prime reason for our not releasing the report.

I understand that you feel that some areas of the report might be security sensitive. Could the analysis of the costs of the system and the reporting on the financial side of the system, as put out by Fujitsu, with no security implications, be made public? The public would be interested to know about the real costs of the system, the running of the system and the alternatives. Could that information be made available?

I am happy to go away and look at that matter. We need to take care with such issues and come to the right conclusion. We want to provide the committee with as much information as we can as quickly as possible. The committee will appreciate that my primary function is to ensure that my officials do the job, but we also wish to do so in as transparent a way as possible. I will go away and look at the matter before coming back to the committee, if I may.

Thank you.

The cabinet secretary will recall that, 20 years ago, I retired as the director of technology innovation at the Bank of Scotland, so I am 20 years obsolete. However, I am not unfamiliar with some of the challenges of running projects of such scale.

I am sure that the question is not whether you are obsolete. [Laughter.]

Well, I am bidding for consultancy work or something.

We have a much more complex support scheme in Scotland than there is elsewhere in the UK, because that is what farmers asked for. Is the system that we are now implementing sufficiently flexible to meet the inevitable set of changes that there will be at our hand? To what extent is the system flexible enough, in any realistic sense, to manage after Brexit?

There are two answers to that question. There is the political answer and the technical answer. I will give the political answer, and I will pass to Mr Turnbull for the technical IT answer.

The current system is ludicrously complicated. I say that from a position of some experience. The database contains 743 different table types, with 8,839 unique attributes and 1,067,229,730 unique records. The database needs to deal with 700,000 land parcels, 4 million hectares of land and 1.7 million internal features. The margin of error that is acceptable under EU rules is half the size of a tennis court. If there is one aspect of the EU that I feel is ripe for reform and simplification, it is that area—incidentally, Commissioner Hogan agrees with me. However, we made it additionally complicated in Scotland by having the three-regions approach. My personal political view is that, in designing the transition period, we need to bring in stability and certainty, but, when we design a new system, we should bear in mind that the perfect can be the enemy of the good.

Simplicity in a new system would have a lot to commend it because, apart from anything else, it would avoid the scenario—which, sadly, we have been in—in which we are not able to operate the system as well as we would like. That is why we have adopted a plan B pragmatic approach in utilising loans, at 90 per cent in most cases. From a business point of view, that has been a very good plan B. I quoted the figures—I am not sure whether they have been in the public domain—to illustrate how complex and difficult the system is. Perhaps Mr Turnbull will be able to say whether the system can be adapted for the future, because that is an important and technical point.

Mr Turnbull, you can address that point. However, the cabinet secretary has given a fairly technical answer about lines and data, so I ask you to keep your answer very short.

Again, I refer to the Fujitsu report, which said that the architecture was fundamentally sound and that we should not scrap it. We should go back to that original premise. The system has been built in components. We have a customer administration and customer relationship management part of the system, a payments part of the system and a rules-based part of the system, so there are a number of components that can clearly be reused. However, at this point, I will not commit—the committee would not expect me to—to exactly what we would need to do to adapt the system so that it could work in a new environment. However, we have started some of that work, based on the information that we have.

11:45  

The cabinet secretary mentioned £178 million as the estimated cost for the basic functionality of the system. Do we have an idea of the potential total cost, including any remedial work that has to be done? That is before we take into consideration the cost of any alterations to the modules that will be required for any future systems. Are we lumbered with a system that has gone vastly over budget and which will in fact be redundant to us in just a matter of years?

Eddie Turnbull may answer that briefly.

I will, very briefly. Jamie Greene’s first question related to the £178 million, which was for a system that would basically work and make payments. That is point 1, and that is what we have held to for that.

The second question was around enhancements to that system to make it work better and meet the requirements of area offices in terms of the business that they undertake. Perhaps Douglas Petrie can pick up that piece. There has been expenditure further to the £178 million this year, but that expenditure is not just on the rural payments and services system—it is on all our information technology services. We manage more at Saughton house than just the rural payments system.

As the cabinet secretary offered, we can do a breakdown by feature of the basic foundation cost and what we have been spending on each of our components of service. We can supply that to the committee.

I am not just looking for a breakdown. Do you have an estimated total cost for the system to have basic functionality and the functionality that it was originally designed to have?

Yes, it is £178 million. That was the original business case—

What about the secondary expenditures? Can you give us the scale of that—

Any computer system requires to be maintained beyond its initial inception. As the area offices and customers start to use the system, we will want to implement enhancements to make it work better—to make it more efficient—to ensure that we meet the deadlines that we have set. For much of this year our focus has been on achieving that stability around the provision of services.

Again, we have figures that I can break down, if the committee would find that useful.

Maybe a written breakdown would be helpful. Before we move on from this question, when you last discussed this matter with the committee, you said that the current computer relied on previous computers to produce what it has to produce. Is that still the situation?

That is still the case. There are two major parts of that that we are implementing imminently, but there will still be a requirement to connect to legacy systems for legacy schemes.

When will the computer just issue the payments, without you having to do it? That is my final question—when can you put in the information and the payments will automatically come out the other end?

For the vast majority of cases, the system is doing that. No doubt we will get into where we are at the moment, but the system is working for almost all processing requirements.

Just to be clear and complete, one part of functionality that was identified in the original business case has still to be implemented. We are currently assessing the benefit of that in the light of what the system will need to do beyond the current period.

Just to clarify—because you have now raised another question—is that the forward-facing bit or the bit within the system? The system was meant to be able to talk to farmers and tell them what was happening.

In terms of planning their land, that is the forward-looking piece.

So that is the bit that is still not working.

That is the piece that we have still to deliver.

Okay. Thank you.

On 12 September, the Scottish Government published the common agricultural policy plan for stabilisation. The stated aim of the plan

“is to target specific and sustainable improvements in our strategic approach ... deliver value for money and maintain compliance with EC regulations”,

and it consists of six main areas of action. Have all the actions in the CAP plan for stabilisation been completed?

As the stabilisation plan set out a scheme that will apply beyond now, by definition, it has not been completed. It applies to the totality of payments, some of which do not have specific time limits under EU law and pillar 2. Annabel Turpie can give a bit more detail, if that would be helpful.

In summary, the package of commitments has worked well, albeit not perfectly. It has fulfilled its purpose by putting a stake in the ground and saying, “We want to move on.” We have given certainty to customers and have got money out earlier than we did previously. In the case of BPS loans, we got money out before 1 December, and we accelerated the pillar 2 payments. I suspect that we will come on to payment progress shortly, so I will not go through the numbers, but we are making payments three months earlier than we were last year. We have ensured that the maximum number of customers have benefited from our online system without the technical disruption that many of them faced in previous years. As the cabinet secretary said, some of the relevant actions are a matter of continuous improvement rather than being ones that we can tick as complete and move on from.

I give Eddie Turnbull a heads-up that I will pass over to him shortly.

Our customer services get online campaign has been very successful. Significant communications and support were deployed. That happened alongside changes to introduce improved functionality for customers and a simplified process for people who had forgotten their identity. Since last year, we have converted around half of our paper customers, achieving an online figure of 89 per cent. That took a lot of work by people across the area offices and in Saughton house. One of the side benefits of that was that we got positive feedback from people who thought that they would never go on the system, who said that it made it really easy for them to apply, for which they thanked us. Staff were encouraged and motivated by the good feedback that they got, because our people really want to serve the farmers, crofters and businesses of Scotland. There was a very positive reaction to that all round.

A lot of the CAP stabilisation plan was about stabilising the IT functionality, which Eddie Turnbull might have more to say about.

I think that the issue has been covered in what has been said about the Fujitsu report, disaster recovery and so on, but I can give an example that relates to the SAF submission window.

We have had feedback from area offices and customers that the system has worked for them. In a few cases, we have had reports of poor performance, but I assure you that we have followed up on those reports to find out whether our system has been at fault or whether the problem has been to do with connectivity or the local technology involved. The area office staff have been terrific in supporting us in that work. This year, we had 31 calls about cases in which there was a suspicion that the system was not working, but we have established that the cause was an issue with the system in only six of those cases. That compares favourably with the situation last year, when we received 114 calls. There has been improvement. The feedback that we have had—anecdotal though it is—is that the service has improved greatly during that window.

One of the great frustrations early on was to do with how changes in land ownership and land management were handled. That is one of the six main areas in the stabilisation plan. Do you feel that that has been successfully addressed?

I would say that that is work in progress. We are doing a very large and challenging updating and enriching of our data, and we have done the first of a small number of data migrations. That is challenging. As we have seen from the news over the past two weeks, the updating of systems and the incorporation of new data are always challenging. As the cabinet secretary and Eddie Turnbull said, we have records on hundreds of thousands of land parcels, to which very specific rule sets apply, and that information needs to be updated.

I am very pleased with the progress that we have made on data migration. I wish that we had made it sooner, because our system depends on our having up-to-date data, and it is inevitable that there will be an impact on farmers. That is frustrating for them, but we have to do that work. We must make sure that, when we bring in the data, it is correct. That is why we have reflected on our plans and adjusted our timing.

The new land parcel identification system tool has not been introduced yet—the timeframe for that is longer. That is why I describe this as work in progress, but it is important that we do it. Doing that while running a system, making payments, dealing with customer queries and supporting farmers is difficult and asks a lot of our people.

The stabilisation plan brought in loans. In the 2017 scheme year for BPS and LFASS, what percentage of those who were eligible for loans did not take them up? Not everyone takes up such loans.

Annabel Turpie will deal with the detail, but the overall picture is that 75 per cent of farmers received 90 per cent of their money—that was the case in October for the BPS. The normal BPS period is from December and January to June, and getting £90 in October as opposed to £100 between January and June is a good plan B from a business point of view.

I will not be satisfied until everything is sorted out completely. We are not at all complacent, but I am confident that the progress that we are making is improving quality and delivery.

I want to understand the position. In 2014-15, farmers got 100 per cent of their payments at the beginning of December, whereas you say that the loan system provides 90 per cent, with 10 per cent held over. Is it your ultimate aim to get back to paying farmers 100 per cent at the beginning of December, as was the case in 2014-15?

I would like the system to work as well as it should and as well as it did in the past. That is my ultimate objective. However, loans are a pragmatic alternative, and to all intents and purposes they are advance payments—no interest is charged unless, in the unlikely event of a clawback, the clawback is repaid late. I am not saying that the system is perfect and I am not satisfied—do not get me wrong—but the system is a good pragmatic alternative from a business point of view in most cases.

I am worried about the number of people who are still not taking up loans. The problem might be that they think that the loans have heavy interest rates, which they do not. It is therefore useful to have the opportunity to restate the position for the record.

If Annabel Turpie has the exact figures easily to hand, I am happy to hear them now, or the committee would be happy to have them in writing after the meeting.

I have the figures but not the percentages, although I think that my rough arithmetic is correct. We made 10,839 offers of LFASS loans, of which 8,360 were accepted. I think that that leaves about 24 per cent not taken up, although that is bound to bite me when I get the right percentage. We made 17,625 offers of BPS loans, of which 13,581 were accepted. That leaves about 23 per cent. I will confirm the percentages in writing.

In all our public engagement about the loan scheme, we and the area offices have made it really clear to farmers and agents that anyone who is interested in applying for a loan and who has not been offered one should get in touch with us directly. There are reasons why we cannot offer some people loans, but new entrants come in all the time. I am aware of a few cases in which we have paid LFASS loans even in the past few weeks. Anybody who did not take up an LFASS loan that they were offered can still take it up, as the loan scheme is still open, so I ask them to please get in touch.

Area offices are in regular contact with customers, and they work hard with colleagues in Saughton to provide appropriate support to our customers who are experiencing hardship. Such conversations can be difficult, but our staff are focused on and skilled in support.

I calculate that 90 per cent of 75 per cent brings the figure down to 67.5 per cent, so only two thirds of the money that normally goes into the rural economy in December is going into it then. If the loan scheme is so good, surely we should know why 25 per cent of farmers are not taking up loans.

12:00  

That is a very serious but fair question, and it is one that we have done a lot of work on, which Douglas might be better able to describe, as he runs the area office.

I cannot give you figures for the take-up, but, anecdotally, some of it is down to the level of payment, which is not a significant amount of money in some farmers’ eyes. Some of it is down to the fact that the money is called a “loan” and some farmers think that, for the amount that it is, they do not want a loan. In some cases—unpalatable as this might be—some farmers choose not to take the money because they do not need it at that time. I cannot put figures on it, and that is not an exhaustive list, but that is some of the feedback that I have had.

The minister is making it clear that it is not a loan but an advance payment. Is that being focused on in the farming community?

Yes, it is—absolutely. We have had multiple conversations, but the fact that some of the paperwork still says “loan” makes it a difficult point to get over.

In 2016, we rang round a couple of hundred people who had not taken up the loans to find out why they had not done so. Our findings strongly mirrored the analysis that we did last year, which I am happy to dig out. Even knowing that they could still take advantage of the loan, not many people asked to do so, even when we went through it and explained the circumstances. As Mr Ewing said, we look into the matter very thoroughly.

As Douglas Petrie said, legally, the Scottish Government cannot call it an “advance payment”; we have to call it a “loan”. However, we do everything that we can in our communications to make it clear to people that there is no interest attached to it.

Do European rules say that you have to call it a loan, even though it is really an advance payment?

Yes.

Okay. Could you send the information from the study to the convener?

Yes, of course.

The actual figures would be very useful to the committee. Thank you.

My question is on the back of the previous questions. The witnesses might have touched on this already, but, for the record, what is the latest news on the status of pillar 1 and pillar 2 payments for 2015, 2016 and 2017?

We have made all the payments for 2015 and all but one of the payments for 2016. In my opening comments, I referred to the figure for 2017. Perhaps Annabel Turpie can give the detail of the figures.

You said there had been 12,586 payments, cabinet secretary.

I will start with 2015. As the cabinet secretary said, we have made all the BPS payments to those who were eligible according to the information that we have. As for pillar 2 schemes, we have no further claims to pay on the agri-environment climate scheme, or AECS; on the forestry grant scheme, or FGS; or on the beef efficiency scheme, or BES. In the case of the BES, that is because it was not paid in that year. For rural priorities, we have six claims still to pay, with an estimated value of £43,000. For the land managers option scheme, or LMO, we have three claims still to pay, with an estimated value of £2.9 million. For LFASS, we have 113 claims still to pay, with a value of approximately £1 million. I will send that information to the clerks with an explanation of the acronyms. I appreciate that they are familiar to me but not to everybody. Additionally, for the LFASS claims that have not been paid, I can provide figures of how many people received loans. I can update the committee on that separately.

As the cabinet secretary said, we still have one outstanding claim for 2016, but it is a penalty case in which we do not expect to make a payment. That is the position. We do not have any claims to pay on beef or sheep voluntary coupled support. As for pillar 2, we expect to pay 22 claims for rural priorities, which we estimate to be worth £90,000. We have 15 claims to pay for LMO, which will be worth £20,000. There are five claims to pay for AECS, worth £40,000, but there are none for FGS. There are eight claims to pay for BES, worth £59,000, and 396 for LFASS, worth £2.3 million.

If the committee will give me one second, I will find out the number of people who have received loans on the LFASS payments. I apologise—I have a lot of information here. Forty-five of the 113 applicants for LFASS payments in 2015 received an offer and were paid a loan in 2017, and 222 of the outstanding applications for LFASS in 2016 were received and were paid a loan. We plan to make additional LFASS payment runs for 2015 and 2016 later this month.

I have some questions on figures that were sent to the committee on, I think, Monday, in a monthly update on scheme payments that is said to relate to data that was captured on 29 May 2018.

I apologise, convener—I have just realised that I have not given you the 2017 figures. I believe that those figures relate to 2017.

In that case, you may be able to add to this. Unfortunately, the update sheet does not tell us how many business registration numbers there are in Scotland. However, looking back at the records and according to the figures that I have from your monthly update, in August 2017 there were 17,997 of them. You have suggested that, by the end of the most recent payment run, 11,510 BRNs had been processed. I assume that, by the time the BRNs have been processed, those businesses will have been paid in full.

In his earlier remarks, the cabinet secretary alluded to 12,586 BRNs having been processed as at today’s date, so I assume that the position has changed between 29 May and today’s date. The figure of 17,997 BRNs in 2017 means that roughly 5,411—that figure may be exact if we have the same number of businesses—have not been processed. Is that correct? When will the payments be completed? Will that be done by 30 June, which is the critical date?

We are doing weekly payment runs, so I have a figure that has been updated beyond the one that Mr Ewing provided. We have made payments for 13,171 BRNs for 2017. I apologise for restating what I have said before, but it displays some of the complexity with which we are dealing. We expect to make 18,300 payments, but we are still getting information from customers. Some of the people whom we think are eligible just now will undoubtedly become ineligible, as happens every year—that number always varies. We have, therefore, made 72 per cent of the payments and, as you have said, convener, we have just over 5,000 payments to go.

We are now in an intense processing period, which we are managing. As the committee would expect, we have, once again, set up a dedicated payments team who are making sure that we understand what our trajectory is, that we are working on it and that the people who need to do things are doing them. A lot of the people who need to do things in order to meet the 95.24 per cent target—which is a UK-wide target—are in our area offices; therefore, this year, Douglas Petrie has introduced a change in having a very strong and supported network with one SAF co-ordinator in every office. The co-ordinators meet regularly by videoconference and by phone, and they make sure that, across the offices, we are addressing all the errors that we need to address. Some offices are further ahead than others, and we will move either cases or people about accordingly. We have brought in an additional team of 12 people at Saughton house, who can help with error processing where that is appropriate.

We continue to work through any data issues that arise. Members will remember that, last year, we had what we called a “fog” of land issues. We do not have anything like that this year, but the question of regions is still complicated. There is still work to do to allocate those to applications for tiny slivers of land that do not have a region. There will not be payments in the majority of such cases, but the system requires that applications have associated regions, so we are back into the complexity of the system.

We work in teams. Every day, I have a meeting at which we look at our progress and check that we are on track to reach the figure of 95.24 per cent, which we absolutely are. I am trying to answer the convener’s question about whether we will achieve that by the target date. It is tight, but we are ahead of last year, which is good. I—and we, as an organisation—do not want to be in the position of still having several thousand applications to get through in June. Barring anything coming up, the target date is what we are aiming towards.

There was a huge amount of detail in that. If I remember rightly, the 95.25 per cent that was achieved last year to prevent us from being in trouble was achieved when the UK was aggregated. Is the 95.25 per cent going to be achieved in Scotland by the June deadline?

That is what we are aiming for and what our trajectory is.

I will make a general observation. Will you explain why, given the numbers that you have just provided, millions of pounds in payments are still outstanding to hundreds of farmers going as far back as 2015? What are the reasons for those delays? It seems like a substantial amount of money has still not been paid to farmers over the past couple of years.

Douglas Petrie has the benefit of having been in the organisation previous to this CAP regime, so he might be able to come in on the question. However, in any year, there are always a number of complex cases. Sometimes, they can involve disputes over who owns the land or requirements for customers to provide lots of information, which does not come quickly enough. Sometimes we have to do assessments and sometimes we have inspections that throw up errors that have to be checked. Douglas Petrie might be able to give more examples and a more from-the-ground perspective on the matter.

My understanding is that, going back many years, there is always a tail of complex cases. We are working through them. We also have a lot of work to do to get payments out now for SAF 17. Therefore, in some respects, we are always keeping an eye on ensuring that we balance everything. Sometimes, that just adds time.

I am conscious of the questions that we need to get through. Do you still have to shut down the payments for the year that we are in to make a payment for the previous year? That is what happened before. Is it still the case?

Certainly that happens between schemes because of how we handle debts. Debts are loaded against specific schemes so, to make LFASS payments, we take all the debts that are on the system for BPS payments and load the LFASS information. That has a time implication.

Andrew Watson might know whether the same issue exists between years.

No. The main issue is the processing of debt, as Annabel Turpie describes.

I will ask about the severe weather payments. On 18 April, the Government announced a £250,000 package of support to help meet the costs of retrieving fallen livestock and to address feed and fodder shortages, for instance. How much of the £250,000 has been allocated so far? What longer-term solutions are you considering to address the further problems that are likely to occur later this autumn and to manage similar extreme weather events in future?

The sum of £250,000 was provided through the NFSCo CIC—the national fallen stock company. That is the vehicle through which it was done and, as Mr Chapman probably knows, the one that was used before. The aim is to offset some of the extra costs to farmers of dealing with dead sheep and cattle. The support will cover the February to April period and will be made available to farmers in areas of Scotland that are covered by fallen stock collection services. Applications closed on 31 May and support payments are expected to be made in July. We are happy to provide reports in response to Mr Chapman’s question then.

We want the money to be used. It is a relatively modest amount, but I want very much to acknowledge our appreciation of just how bad it has been economically and on a human level, as I am sure Mr Chapman knows extremely well. We are also extremely concerned about mental health issues, particularly for those farmers who are alone, perhaps isolated and working day in, day out in the weather. The rest of us can close our doors to that, but it is a fairly dismal experience if a farmer, day after day, has to deal with the difficulties that are added by appalling weather and, of course, fallen stock.

12:15  

It would be useful for you to update the committee, so I ask that that be included in the scheme payment monthly update that is submitted to the committee. I assume that after June, which is the critical period, you will see that we get an update to summarise June’s position as soon as possible.

It is a non-recurring matter, but we will certainly get the information to you.

Thank you.

At this time, you do not know how much of that money has been allocated. I understand that, but what about longer-term solutions? You said that you were going to convene some meetings to look at the longer-term issues.

We established the agriculture weather advisory panel to look at the impacts of the weather on business resilience. The farmers on the committee will be more familiar with those than I am, but the panel will have practical ideas, such as for the sharing of fodder between those parts of the country where there is more ample fodder, silage and so on, and those parts that are under pressure. Those kinds of practical ideas are being pursued as well as other matters. Perhaps my colleagues want to add something.

I co-chair the agricultural weather advisory panel. I have attended the meetings, which have been positive discussions with a focus very much on longer-term resilience in the sector. As well as the fallen stock support that we have described, we have spent quite a bit of time looking at issues such as feed budgeting and the support that we can give to that.

Another key issue has been the engagement of the Met Office with the panel. One of the lessons from the heavy snow, as I understand it, is that the snow conditions were such that it made our forecasting more predictable and certain. That had a beneficial effect in that we gave farmers at least some notice for the planning that they needed to do, which was really welcome. We are interested in exploring how we can make even better use of the Met Office in engaging with the sectors. That is certainly one issue for us.

The panel’s next meeting is, as the cabinet secretary said, at the Royal Highland Show. We are now getting into the summer, so we are deliberately looking far ahead and seeing what lessons can be learned for next winter.

I have a question about live animal exports. I had a series of questions but, given time constraints, I will roll them together. If the convener will allow me to give a bit of background, the Scottish Parliament information centre has produced a briefing on the issue entitled “Live animal exports—ban or no ban?”

We know that the UK Government has launched a call for evidence, and you might be familiar with the fact that your colleague Christine Grahame has launched a motion calling on the Scottish Government to engage in the consultation on a ban on the export of live animals. As further background for others, animal welfare is devolved but trade is reserved—that is acknowledged. The UK Government has a call out for evidence.

I have a couple of points. How are you engaging with the UK Government? What impact would a ban have on Scottish agriculture? If the UK were to introduce a ban, would Scotland be able to opt out?

Before you answer, I note that, under the heading “What is the Scottish Government’s position?”, the SPICe briefing that I referred to quotes you from a BBC interview as saying:

“Let me be absolutely clear, this is one UK-wide framework the Scottish government will not be participating in. I will not support anything that creates further challenges or difficulty for our farming sector or puts Scottish agriculture at a disadvantage.”

We are co-operating with the UK Government on that. To be clear, animals are transported for different reasons. There is currently no export of live animals from Scotland directly for slaughter in continental Europe.

The scope of the UK Government’s call for evidence is limited to the question of banning the export of live animals for slaughter. As I understand it, that is its purview, and nothing beyond that.

First, the highest animal welfare standards must prevail. It is essential to aim to limit transport to that which is necessary. Secondly, it is essential for the standards to be applied extremely diligently. I have rightly spent a lot of time with my officials on ensuring that we adopt that practice, which we do. My officials are engaged in a study, which I think is the first in Europe, in which they will travel to Spain to monitor the conditions that pertain. Stops for hydration and rest for animals are built in, and we are applying the EU rules to the letter. It is important for me to say all that because, sadly, there has been a lot of misreporting.

Without the capacity to transport animals, our farmers who operate in Orkney, Shetland or any of our islands would be unable to do livestock farming. We should bear that in mind. Animals are transported for a variety of purposes other than slaughter, such as being shown at the Royal Highland Show and shows around the country.

I am grateful for the opportunity to stress that the key is that the highest welfare standards must be applied. The legal framework allows farmers in Scotland to do what is necessary. We criticise some practices that have been pursued not in Scotland but in the export of animals from England. For legal reasons, I will not go into that, but there has undoubtedly been some bad practice, which we condemn as strongly as anyone else.

That is extremely reassuring. If such export is not taking place from Scotland, I do not understand why you talked about “further challenges or difficulty” for the Scottish agricultural sector. You talked about hydration and rest stops and, under the previous agenda item, you said—I hope that I noted it correctly—that slowing each lorry by two minutes would result in a 70-mile queue. Surely there should therefore be no difficulty in getting fully behind a ban. Animal welfare is devolved and you are in a position to respond to public concern and work towards a total ban, which should not conflict with anything that you described.

The point seems to be fair, but it presupposes what we are being asked to support. It is necessary to transport animals. Whether they are transported on land or at sea, the welfare standards must be equally high. Animals are exported—for example, to Northern Ireland—for necessary purposes other than slaughter, and it is important for that to continue, but it must only be in accordance with the highest standards.

Some people originally thought that the UK Government proposed to ban all exports of animals, but that is not what I understand to be proposed. In fact, the proposal is limited to a ban on export directly for slaughter, which is a particular instance that does not apply to Scotland. I hope that that will be looked at extremely carefully, because we are not certain that high welfare standards are being applied there.

We do not want to be part of a framework that imposes a blanket ban on the transport of animals. I have seen a letter from the leader of Shetland Islands Council that calls on Michael Gove to come and see the conditions on the Serco ferries, for example. The issue is important and I am grateful to have had the opportunity to set the record straight.

I will roll together a couple of questions. If any area is uninvestigated, I might raise it.

There is no suggestion that the transport of animals from Scottish islands to the mainland or between Great Britain and Northern Ireland should be banned. The concern is about the transport of animals outwith the UK, where we have no control over their welfare. That is what a ban is supported for. I am not clear about the Scottish Government’s view on that. Do you support a ban on the export of live animals for slaughter or fattening—yes or no?

I agree very much with what Colin Smyth has just said. Welfare organisations have told me that, although animals from Scotland are not exported directly, they find their way to Northern Ireland and into the Republic of Ireland and are then exported to Spain and north Africa, where welfare standards may not be as high as they are here. Therefore the concern is not so much about direct exports from Scotland but about Scottish animals ending up in Spain and north Africa for slaughter.

We support the UK Government’s call for evidence on this issue, which it would be useful to have. We reserve our position on not making any changes to the current EU and national legislation that could disadvantage Scottish agriculture, for the reasons that I have stated. I confirm that we are carrying out pioneering work—more details of which I can share with the committee—precisely because we are determined to ensure that the highest welfare standards prevail. There is no doubt or disagreement about that. Sadly, there has been a lot of misreporting—particularly on social media, I regret to say.

I will let John Finnie have one more go at that.

Cabinet secretary, every time you reassure me, you go on to give me cause for concern. Surely no advantage to the Scottish agriculture sector would be gained by there being dubiety about the highest animal welfare standards applying. Wanting a ban is not in conflict with that. My colleague Colin Smyth has outlined what the position is. I represent the Highlands and Islands, so I know and appreciate the concern that there is about the high welfare standards that apply to transporting animals there. However, we are talking about export for slaughter in areas in which standards are not the highest. I would have hoped that, as Scotland’s Cabinet Secretary for Rural Economy and Connectivity, you would have thrown your weight behind the public concern that there is about that.

I do not really understand the premise of the question. We support the UK Government’s call for evidence on the issue. We also support the highest welfare standards and are determined to do everything that we can to ensure that they apply. In case there should be any dubiety on the matter, that is precisely why we are proceeding with that work. My officials are directly involved, and I believe that they are ready to travel to Spain themselves to inspect what is going on. That is precisely because I would be concerned about any failure to meet those high standards.

Has there, as some people have suggested, been a reduction in tenant farming over quite a long number of years? I note that yesterday the Scottish Tenant Farmers Association issued a press release calling for the sale of Auchenhalrig farm in Fochabers to be stopped. Does it concern you that there seems to be a reduction in the number of tenant farms that are available? Would tackling that be a question of changing the law, or could we change the atmosphere or do anything else to tackle it?

The Scottish Government is very supportive of tenant farmers across the country. In answer to the question that John Mason asked in the previous evidence session, I outlined the various ways in which we try to direct such support. In many parts of the country, including in my constituency, most farms are rented, and usually from large estates. I stress that the picture is not all doom and gloom. A recent survey—the full details of which I do not, I am sorry, have to hand—reported on the attitudes of tenants and landowners. [Interruption.] I am grateful to my officials for giving me the statistics. They confirm that I am right, which is always reassuring—about the summary view of that research, which was that the figures on parties being content were 88 per cent for landlords and 82 per cent for tenants. Such evidence is useful, as it has been surveyed.

12:30  

However, where people are discontent, there can be very severe problems, particularly for tenant farmers who live on their farms and rent their homes as part of their holdings. Difficult issues, particularly on rent review, have caused a huge amount of misery and anxiety—as, I am sure, members are all aware from constituency work.

I would very much like to see an even more vibrant rented sector, and I would like to get across to landowners the message that we are not proceeding with legislation on an absolute right to buy. Apart from anything else, that would clearly be illegal under article 1 of protocol 1 to the European convention on human rights. It is not on the agenda; therefore, to my mind, there is no restriction on or impediment to private contractual arrangements between landlord and tenant. When those work well, those private business arrangements operate between individuals between whom trust exists, which is the key thing.

Lastly, we have rent-review provisions that we want to bring to Parliament as soon as we can. They are very complex—the capacity of a farm is not a simple matter, by any means—but there has been good work done by all stakeholders. I will not be drawn on the timescale, convener, but I hope that before too long we will introduce the relevant subordinate legislation to implement the last part of the land reform legislation.

I am grateful for that. You said that the tenant farm sector is quite vibrant and that the problems really exist just around the edges. You also said that the Government has released land to encourage more people into farming, which sounds positive. Do you not feel that something very dramatic needs to be done?

The sector is vibrant where it works well, but where it does not I would not wish to apply that word, at all. I am saying that I do not think that there is any impediment to more leases being granted. From discussion with farmers, I know that there are lots of different types of arrangements. Many farmers who have their own farms also manage others, and do so very well. There are lots of different contractual arrangements; leasing is not the only option. However, I am aware that there are, sadly, grave difficulties for a number of tenant farmers, which is why we have the tenant farming commissioner and a number of important pieces of legislation to try to improve such issues.

I recognise that the tenant farming commissioner has done some good work. The cabinet secretary is also right to say that, in many cases, relationships between tenant farmers and their landlords have improved. However, the reality is that, over a number of years, we have lost tens of thousands of acres to the tenanted sector. Landlords see farming as being high risk and low return, which is part of the problem.

I encourage landlords to think about having private contractual arrangements. I do not think that there are any impediments to their doing so. Some of the perceived impediments are not real, and it is useful to have an opportunity to do things in that way. However, at the end of the day, it is not up to Governments to make such arrangements. We have an existing legal framework, under which the options of short and limited-duration tenancies exist, and grazing leases can be deployed. There is a range of other options. It is for people who are in business to make their own arrangements; I encourage them to do so.

I share Mr Chapman’s concern about the diminution in the rented sector, which I hope we can address. I am very pleased that the farming opportunities for new entrants—FONE—initiative that Henry Graham has been chairing has identified opportunities for younger people to come into farming on public land. That is an area where, in the post-Brexit scenario, I am sure that all of us would wish to see what more can be done, particularly since the average age of farmers, like myself, is 60.

I do not know whether you are comparing your age or the fact that you are a farmer.

I would like to raise a concern of a lot of people to whom I have spoken. I accept that there are lots of different forms of tenancy, but long-term tenancies allow people to invest, because there is huge cost in investing in machinery and animals. There is a perceived threat on the horizon that does not seem to go away, and that is the threat of the right to buy. If that was taken off the table, would that increase the number of tenant opportunities that would be available in Scotland?

I have already tried to answer that question by saying that the absolute right to buy is not on the table at the moment.

It is not “at the moment.” That is the problem.

We have no plans in that respect. An absolute right to buy is not in our programme for government: we tend to try to do the things that are in our programme for government. We have no plans to introduce a right to buy—it is not on the table. There is no impediment to lease arrangements being entered into. It is useful for me, as cabinet secretary, to have the opportunity to confirm that that is the case.

I personally wish to see land used to its best effect, and leasing of land is simply a legal mechanism to enable that objective to be achieved, and also to see more people come into farming. As a tenant, one does not pay the capital cost of purchasing land, so tenancy is a better vehicle for new entrants than outright purchase, the cost of which may well be beyond most young people. That is an important point.

I am grateful for this line of questioning—surprising as that may seem—because it allows me to confirm that, from my point of view, having discussed the matter with many surveyors, the absolute right to buy is not on the table. The Scottish Government has no plans to go ahead with such a right, and we are here until 2021, barring the unforeseen. I hope that that provides some assurance. I would love to see more rented options being pursued by landowners around the country, and I urge them to reconsider so doing.

The final question is to tie together something that you said previously about the reports from the national council of rural advisers. I believe that a statement is to be made in Parliament about that next week—on Tuesday, I think. Can you confirm whether the report will be published before that? If not, when will the report be published?

The final report will not be published for a few months yet, but a discussion paper will be published and it will be substantial. Because I have had some involvement with the NCRA’s work and am aware of some of its thinking—the committee will be aware of the previous document that it published—I think that it should be the subject of a parliamentary statement. I do not want to prejudice that and get myself into hot water with the Presiding Officer, so I am not sure that I should go too much further than that, but you will know by next week—on Tuesday or Thursday.

That brings our evidence session to a close. Thank you, cabinet secretary. I also thank Annabel Turpie, Douglas Petrie, Andrew Watson and Eddie Turnbull for coming along and supporting you.

12:38 Meeting suspended.  

12:39 On resuming—