Rural Affairs, Climate Change and Environment Committee

Meeting date: Wednesday, October 5, 2011

Official Report 430KB pdf

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Draft Budget 2012-13 and Spending Review 2011

Agenda item 2 is scrutiny of the draft budget for 2012-13 and the spending review 2011. I welcome to the meeting Richard Lochhead, the Cabinet Secretary for Rural Affairs and the Environment, and his officials, Mike Neilson, Jonathan Pryce and Rab Fleming. The committee’s adviser, Dominic Moran, has joined us for the session. He cannot ask questions, of course, but he will be advising us, discreetly.

I invite the cabinet secretary to make some opening remarks.

As I am sure that the committee is aware, the Scottish Government’s purpose is to focus on creating a more successful country with opportunities for everyone in urban and rural Scotland to flourish through sustainable economic growth.

The spending review and draft budget, the Government’s economic strategy and the programme for government reflect and support that purpose. However, delivering that purpose at a time of significant cuts in public expenditure will be a challenge. The committee is aware that I have had to take difficult decisions in my portfolios, against a backdrop of United Kingdom cuts—I remind the committee that the Scottish budget has been cut by 12.3 per cent in real terms over the period of the UK Government’s spending review up to 2014-15.

I have prioritised economic growth in my spending plans. For instance, I have doubled the food and drink industry budget, to provide further assistance to help our world-class food and drink sector become a true world beater. The Scottish Government has also established the next generation digital fund, as part of the Scottish Futures Trust, to help to provide and enhance digital access in rural Scotland. Further, I have continued investment in the rural economy through a new land fund to support community empowerment, and increased resources for the land managers renewables fund.

Those policies cover my four overarching aims: community empowerment; improved rural connectivity; strengthening primary production, which will help to build up our food and drink sector; and supporting renewables to tackle climate change and protect our environment.

As the committee is aware, the transition to a low-carbon economy has become a new strategic priority for Scotland in the Government’s economic strategy. My portfolio includes the Scottish Government lead on climate change. However, the Minister for Environment and Climate Change will talk in more depth about our climate change programme when he appears before the committee in due course.

A lot of the work that we lead on emissions reduction is the responsibility of other Government portfolios to deliver, but I have gone out of my way to protect key programmes within my portfolio, such as zero waste, which has an important climate change function as well as the broader benefits of reducing waste and increasing resource efficiency. As far as possible, I have protected our science and research capability, including strategic research on rural, environmental and marine issues. Of course, a large proportion of the budgets that are managed in my portfolio are co-funded by the European Union.

We will continue to support our rural and coastal communities through the Scotland rural development programme and the European fisheries fund. This is a critical time for those schemes, as the common agricultural policy and the common fisheries policy are in the process of reform and renegotiation. I will, of course, work hard to make Scotland’s voice heard in those negotiations and to get the best deal that we can for Scotland’s farmers and fishermen. It is hugely important that we do so.

In 2010-11, we paid £455 million in EU funding to 20,000 producers through the single farm payment and Scottish beef calf schemes alone.

The portfolio is responsible for ensuring that Scotland’s natural assets and rural resources continue to contribute to sustainable economic growth by underpinning our successful farming, aquaculture, fishing, forestry and, increasingly, energy businesses. Although we have had to make savings across the portfolio, we have where possible limited the impact in key areas that are crucial to that continued success.

Many of the challenges that we face are a result of the economic legacy of the previous Labour UK Government and the economic policies of the current coalition Government. The budget settlement has been difficult, but it will still deliver good outcomes for rural affairs, the environment and climate change. With our plans, we will continue to empower and connect rural communities; promote our fantastic food and drink sector at home and abroad; and tackle climate change and make best use of our natural resources to power us into the low-carbon economy of the future.

I am happy to take members’ questions.

Thank you, cabinet secretary. We want to cover a lot of ground, so I ask members and the cabinet secretary and his team to be as concise as possible.

I will start with the report on proposals and policies, as it affects farming. Is the funding for the farming for a better climate programme sufficient to deliver the emissions reduction targets that are outlined in the RPP?

We have ensured that resources will be available to help our farmers adapt to climate change. As I said, we have gone out of our way to try to protect some of the crucial budgets that will contribute to emissions reductions. Given that land use in Scotland accounts for about 20 per cent of emissions, we must take seriously our responsibility for ensuring that farmers are equipped to adapt and our responsibility for general land use policies. I believe that funding will be available for the farming for a better climate programme. As I said in my opening remarks, we have set up the land managers renewables fund to help farmers adapt. We are working with agencies to fund the climate change monitor farms that are up and running. The programme allows farmers to lead by example and lets others learn how they are adapting to low-carbon farming. We are doing our best to protect those funds within our budgets.

How many monitor farms are there?

I recollect that there are three, but I would have to double-check that. I will write to you on that. No doubt I will have to pick up on a number of details today. I think that there are three farms across Scotland.

That is a start.

Looking to the years post-2013, how might the emissions reduction targets be affected by CAP reforms and therefore Scotland rural development programme reforms? To what extent have those potential effects been taken into account in the budget and spending review?

The third year of our three-year spending review will kick in with the post-2013 programmes. I apologise for a bit of vagueness, as we have only indicative figures for the first year of the next CAP and SRDP. However, it was important to ensure that we had budgets in the spending review for that.

The point is important for a couple of reasons. First, on the CAP negotiations, I am sure that the committee is looking forward to the proposals from the European Commission, which come out next Wednesday, and to considering the implications for Scotland. As part of the debate, there is a Europe-wide aim of greening the CAP budgets. There is a potential for the Commission’s proposals next week to include a regulation under which the greening element would have to be up to 30 per cent of overall payments to farmers.

That poses an issue for us about how we ensure that farmers can deliver the greening objective. Of course, that proposal will be subject to negotiations in the next year or two, but it reminds us that our farmers will have more responsibility in future to green agricultural production in Scotland. We are making good progress on that as it is, but on the proposal to make it a condition of farming support, we need to sit down with our rural stakeholders and agriculture sector to ensure that we are going in the right direction, as the new CAP begins to reflect that. I can only refer to my previous answer on how our budgets are beginning to address the issues.

Another dimension that I did not mention either in my opening remarks or in my response to the convener’s question is our research and science budget. The aim of many of our research and science programmes, which are now being carried out by research institutes in Scotland, is to find out how land use policy, food policy and agricultural policy can be more sustainable and we are trying to ensure that our science and research budgets are geared towards getting some of those answers.

Having reflected on our experience of the SRDP over the past few years, I certainly think that under the next programme we should be much more focused, particularly on the climate change agenda. I hope that the next SRDP will deliver adequate support to make agricultural production greener.

Good morning, cabinet secretary. With regard to agri-environment payments, you said that there might be a 30 per cent greening of the future CAP, that CAP reform was critical and that we need to get the best deal possible. As we know, compared with the rest of Europe, Scotland is on a pounds per hectare basis at the bottom of the table for agri-environment schemes. With that in mind, do you not think that cutting agri-environment measures by £10.9 million over the next four years weakens Scotland’s position in getting a better green deal out of the new CAP?

The best thing that we can do for Scotland is to secure much better pillar 1 and pillar 2 deals from the new CAP. As you point out, we get the lowest level of pillar 2 funding not just in Europe but in the UK, which means that we are at the bottom of the bottom of the league. That says a lot about the priority that previous Administrations gave to rural Scotland.

Compared with many other countries, we are also getting a low level of pillar 1 funding. Indeed, I think that we are fourth lowest in the whole of Europe for direct funding for farming. As I say, the best thing that we can do is to increase through the negotiations the European funding element in the years ahead and I hope that we can secure the UK Government’s support in that respect. I point out, though, that in my meetings with European commissioners over the past few years they have often held up Scotland as a good example of what other countries should be doing; indeed, they highlighted the agri-environment schemes in particular. I am quite proud of and pleased with our record in such schemes.

As for the picture we are painting in the budget, we are confident that the agri-environment schemes we will fund over the next three years will meet demand. We have looked very carefully at demand in recent years and the size of the projects that are being proposed for the next couple of years and have tailored our budgets to meet that demand. There has been a modest reduction in the budget headings but the fact is that, in the first couple of years of the SRDP, there was a very slow take-up of agri-environment schemes. That was followed by two peak years—this year and the year before—and our budget for the next three years reflects what we see as the level of demand in the years ahead, which is similar to that in previous years. As I have said, we are confident that our agri-environment budget will meet demand.

Is Scotland on course to draw down all the available EU funds for the programme period? If there is a reduction in funding, what problems will that cause? How will the Government help the worst affected? Could the rural development funding that Scotland will receive post-CAP reform be affected?

This issue has become more important than ever before. I can assure the committee that because of some of the cuts that the Government has to face and which have been reflected in my portfolio, we will have to squeeze every last drop out of the European pot. That is certainly our objective and it has been reflected in our budgets for the next three years. Although some budget headings setting out our contribution to some of our policies and policy aims, particularly within the SRDP, have been reduced, the cut to our overall spending power will not be as severe because we will be able to draw down more European funding.

We are also trying to maintain as much spending power as possible over the next three years by increasing co-financing rates. That will be reflected in the SRDP and other European funds. In short, then, we will squeeze out every last drop of European funding and increase co-financing to its maximum possible rate to maintain as much spending power as possible—even though, because of our budget constraints, more will come from Europe and less from domestic funding.

10:15

On how that will affect the post-CAP negotiations, there is an interesting debate going on in Europe just now, because it is fair to say that Scotland and the UK are not the only countries in Europe facing budget cuts. As part of the European debate over the new CAP and pillar 2 funding—rural development funding in particular—the co-financing rates will be a big topic of debate. Many member states will want a bigger co-financing rate as part of the post-2013 scenario, because they will have less domestic money available. In other words, the situation that we are coping with just now might become more the norm in the future. If member states in Europe have less domestic funding, they will need more support from Europe. That will be part of the debate around the post-2013 scenario.

You talked about an increased co-financing rate from Europe. Is that increase guaranteed or does it have to be negotiated? If it has to be negotiated, what guarantee is there that we are likely to get it?

My understanding is that it has to be requested, but there are set limits to what we can request. We have every confidence that the process will be smooth and that we will be able to apply for what is there—just the increase in the co-financing rates.

How much is that increase likely to be?

On average it is expected to be 63 per cent.

Clearly the SRDP is a massive programme that includes many schemes. We are constantly trying to balance our budgets and look at the demand for applications under each heading. We are constantly trying to shift funds from one heading to another. Agri-environment schemes might be more popular than business development, for instance. We are constantly trying to give positive responses to as many applications as possible, so sometimes we shift the budgets between headings. That also applies to the co-financing rates. In the past if we have had a lot of money available domestically, we have been able to make the European money go further by calling down less of a co-financing rate—say 40 or 50 per cent. However, as domestic funds become tighter, the co-financing rate is increased to ensure that the schemes get funded. That is how it works; it is a constant battle that involves balancing budgets and shifting money between different headings.

Thank you.

I hear what you say about shifting budgets, which seems to happen as a function partly of demand on the ground. Do you already have a clear idea of which schemes you would seek increased co-financing for, or would such decisions require to be made at a later stage?

Our rural priorities scheme is, in effect, where we are going for a greater co-financing rate. There are different co-financing rates, but we will be maximising them all, because of our overall budget position.

The way in which the SRDP has operated has drawn a lot of criticism, particularly around the time taken and the complexity. In this budget round, have you assessed means to speed up the way in which it deals with the different aspects of funding, so that clients can be more assured that there will be a shorter time lag between application and receipt of funding?

That is a good point. I can only apologise to many applicants who have not had good experiences of the SRDP in terms of the bureaucracy. As I have explained to MSPs many times, a large part of that is down to the European hoops that we have to jump through. However, we hold our hands up, because I am sure that there are many things that we could have done to implement the scheme better in Scotland.

The backdrop is that 4,500 projects have been successful under rural priorities alone, which has led to fantastic projects running throughout the country. We tend to hear about the projects that have some difficulties and problems, but they are a tiny minority of the overall 4,500. However, I accept that some community groups throughout the country face some very unwelcome situations. We have taken a number of steps to deal with that and, thankfully, the number of projects that face difficulties has been reducing dramatically over the past year or so.

On how that is reflected in our budget, all that I can say is that we had to put resources in our budget for information technology systems for the post-2013 SRDP and agricultural support system. Post-2013, we have to get the infrastructure, resources and skills in place to ensure that what is likely to be quite a complicated agricultural system from Europe and the next SRDP work.

There seem to be hold-ups sometimes at the level of risk-averse officers who deal with particular projects. I get the impression around the country that they do not think that they can understand the rules sufficiently well, but it seems that many of those rules are much clearer than they have made out. We have examples of that. I hope that we can discuss that matter in more detail later, as it is important for people out there to know that, although there are successes, there will be ways to avoid the hold-ups that have occurred. Many of those hold-ups have been sorted out.

Yes. I am happy to send the committee information about on-going work to improve the system in order to enable members to decide how they want to progress that debate. Fast-tracking mechanisms have been introduced for many schemes, which means that many people do not have to go through a long decision-making process if they fall under certain thresholds, and we are always improving application processes. However, we did not design the SRDP in the first place. As I have said in the past, it is like having designed a fancy new engine and a fancy new car and no one switching on the engine to see whether it works before it is sold. We have found ourselves constantly having to fix the engine with the SRDP.

I have a question that we were going to ask you slightly before now. Given the cut in rural priorities programmes, how much support from the SRDP is likely to be available to farmers to install anaerobic digestion facilities to process animal wastes?

We have been funding a number of those projects over the past year or two, and it is fantastic to see a number of anaerobic digestion plants being built in Scotland. I am looking to colleagues to remind me of the current budget heading for anaerobic digestion, as the projects could be funded from more than one source.

Business development.

I am sure that it is business development. There will be more rounds for business development, albeit that they will be more focused. However, I think that it is safe to say that, because of the reduced funding and increased focus, we will look to focus on such projects as parts of agendas that we spoke about before.

Thank you for that. We move on to new entrants schemes.

How much funding is available for new entrants to farming? I have not been able to find that in this year’s budget. How does that funding compare with the funding in the previous year?

There is not a specific budget heading in the SRDP for new entrants, but we have a policy of supporting applications for new entrants to the general pot. So far, there have been 79 applications for new entrants to the SRDP, of which 63 have been approved.

We have discussed new entrants in the committee before. Things have not gone as well as we would have liked because of external factors as well as funding issues, but at least we are helping some new entrants. The vast majority have had their applications approved, to a value of just under £2 million overall. We said that we would make money available in the SRDP for new entrants, and we will do that. We will ensure that the current budgets cater for applications for new entrants.

Is the funding increasing or decreasing over the piece?

The overall budgets are decreasing.

Are the people coming forward and the money going into new entrants schemes increasing or decreasing in time?

I think that the number of applications has been increasing, but the trickle is still quite slow. I would be misleading the committee if I said otherwise.

The retention of capital receipts has been discussed on a case-by-case basis. Can you give details of how capital receipts have been handled in the previous 12 months?

Are you talking about capital receipts from agencies?

Yes—from agencies in particular.

I will have to pass that question to Mike Neilson.

You have set out the general position—we would have to consider individual cases to give you a meaningful answer. If you have any particular cases in mind, we can get back to you on them.

We are quite interested to know, for example, what provision will be made for the requirement for one-off capital projects over the period of the comprehensive spending review.

I am not sure whether you are speaking about the SRDP and other grant schemes, or whether you are speaking about Government agencies.

I am talking about Government agencies.

We have limited capital budgets available for the next three years, so very few capital projects will be going ahead that involve Scottish agencies—especially those in my portfolio. Thankfully, we have managed to fund a few such projects over the past few years. For instance, the Scottish Environment Protection Agency has built new state-of-the-art laboratory facilities in Aberdeen, and a new science facility is being built in the central belt. We have saved some capital funding for that in the budget, so that should go ahead. There will be some capital projects, but not as many as agencies would like.

I apologise for my gruff voice. On the wider issue of capital, the Cabinet Secretary for Finance, Employment and Sustainable Growth has said that at least £200 million will be transferred from resource to capital. Is that already reflected in your budget, or will you have to readjust the budget to free up some funding for the transfer from resource to capital? If so, do you know how much money may be coming off the revenue side of your budget?

It is too early to answer those questions, as a lot of the detail of how we will take that forward is being discussed within the Government just now. It is probably a question more for the finance secretary than for me. It is, however, unlikely that that will have much impact on my portfolio; it will relate largely to the other Government portfolios. I hope that many of those projects will be built in rural Scotland, but they will not be directly under my responsibility.

Let us turn to waste management.

Good morning, cabinet secretary. You said in your opening statement that the zero waste budget has been protected. However, the budget document shows that it will fall, in real terms, over the period. How may that affect the enforcement of the forthcoming zero waste regulations, which are a key part of the RPP? Can we do anything to help others to move towards zero waste?

Because the zero waste agenda is very important and the committee has taken a close interest in it, we have protected the budgets, albeit that the budget is frozen at £26.4 million over the next three years. That is a substantial budget, given the pressures that we are under, and it sends out a good signal that we have protected the budget as far as possible.

Zero waste Scotland has assured us that our waste reduction programme and our other projects that are under way will be largely unaffected by the budget situation. We were in close contact with zero waste Scotland when we put together the budgets to ensure that there would not be any adverse impact on our policies and plans for the next three years. I am confident that our zero waste programme will go ahead as expected.

Thank you. We move to research funding.

As everybody is aware, Scotland has for many years been blessed with world-renowned research facilities, especially in agriculture and the environment. It would be fair to say that those institutions breathed something of a sigh of relief at the budget announcement but, nonetheless, their funding has been reduced. To what extent have the main research providers been protected against the bulk of the cuts that have been made, despite the fact that there are reductions? You mentioned that some of the funding that has been left in place is geared specifically towards greening up the policies that are likely to be required under the reformation of the CAP. How do the reductions in funding tie in with that research priority?

10:30

That is a good question. As Scotland looks forward to the rest of the 21st century and all the challenges that we face in food, energy and water security, climate change and so on, we need the best scientific evidence and advice as we implement our policies. That is why, up to now, our research institutes have been protected. I know that that is warmly welcomed. The spending review period of the next three years is not the first time that we have had to make cuts and savings, but we are now asking our research institutes and research providers to achieve around 2 per cent efficiency savings a year. As you say, that is a matter of relief compared to the savings that some other bodies are having to make. Research institutes cannot be immune from having to achieve internal efficiencies and savings when we are asking huge sacrifices of other agencies and bodies in Scotland, although we want to avoid front-line cuts as much as possible.

We are confident—and the research institutes are confident—that they can achieve those efficiency savings without any direct impact on their good work. Our existing research programmes relating to food, climate change and our agricultural sector are up and running and are aligned with our funding for the next three years. I hope that our research institutes will continue with their good advice and expertise. Given the financial climate that they face, I guess that they will also make a lot more effort to attract external funding. A lot of the domestic funding that we give to research institutes is used as a platform to attract external funding from the private sector and elsewhere. That has been very successful and has been a hallmark of our institutes. Given the current financial climate, I expect that they will have to do more of that in the future.

You expect and hope that they can make the savings through structural savings and efficiencies and that there will not be any impact on the research programmes that they are carrying out.

I would be surprised if that were not the case, given what other agencies and bodies in Scotland have managed to achieve.

You believe that that can be done without having a negative impact on preventative spending.

I cannot sit here and say that there will be no impact, but I believe that it can be done. It might be a challenge for our research institutes—I am not denying that. However, given the cuts and savings that other bodies in Scotland have had to make, it is only fair that we ask our research institutes to make efficiency savings.

I do not disagree, and I welcome the fact that the research institutes have been spared slightly from some of the impositions that have been made on other institutions. Are you happy that the funding that will be made available for our research institutes will allow them to match their ambitions, which have always been great and have kept them at the forefront of worldwide research in many instances?

We provide substantial funding to our research institutes and I know that, given the cuts in research budgets that are being made elsewhere in the UK, our sectors that rely on that science welcome our support for it. These are challenging times, but I am confident that we will still be able to harness Scotland’s fantastic scientific expertise.

We now turn to marine and fisheries issues.

My question follows on neatly from the topic of research funding. How will the slight cut to the Marine Scotland budget impact on the work that it is doing to tackle the depletion of fish stocks in Scotland’s waters?

That is another pertinent issue in the run-up to the annual fishing negotiations, at which we will have to use our science to back up many of our arguments.

We have gone out of our way to protect the fish science budgets within the Marine Scotland budget, so there will be a slight increase, compared to this year, in the amount of resource that will be made available for fisheries science over the next three years. It is a small increase of a few hundred thousand pounds on what was spent this year, but at least it is going in the right direction—it is not a cut.

Overall, Marine Scotland must make substantial savings as part of the Government’s policy of trying to avoid burdening front-line services with savings and getting its agencies to absorb the cuts internally. Marine Scotland will have to look at its future plans. One of the reasons why we are able to reduce its budget is that we expect more income from licensing marine activities. We took that into account when considering our budgets as, clearly, licence fees are external, not domestic funding.

Mike Neilson has been closely involved in Marine Scotland’s budget challenges for the past year or so and it might be worth asking him to say a few words.

The core challenge is to meet the more ambitious agenda with a budget that is quite tight. Marine Scotland has done a number of things to achieve that. For example, in the past fisheries scientists went to ports around the country to take samples, but we are moving to a situation whereby compliance staff on the site do that, which saves significant amounts of money. We are also looking to operate our vessel fleet more effectively with others, such as SEPA, so that rather than do only a fisheries trip we do a trip that gathers more information, which allows us to reduce the overall cost of vessels. Those are examples of the sort of thing that—alongside increased licence fees, particularly from renewables—will help us to manage the reductions, which will be about 6 per cent over the period.

There are questions about the big increase in the marine and fisheries budget for 2014-15, cabinet secretary. For example, there is a big capital increase in 2014-15 and a big increase in EU fisheries grants for that year. Is there a good reason for that?

I expect that one of the reasons for that is the fact that we are starting new programmes from 2013 onwards. Clearly, as the EFF tails off, we have enough resource there to pull funding down. However, the new European fisheries fund will start in the final year of the three-year programme, so we had to make sure that resources were available, once the new pot of European funding was available, so that we could start to pull that down. There may be other reasons for the increases, so I will ask Mike Neilson to comment.

That is the basic reason.

We thought that it was important to ask, because the increase stands out in a time of cuts.

We will move on to rural broadband.

Good morning, cabinet secretary. Rural communities across Scotland are putting a lot of faith in superfast broadband, which, as we know, has the capacity to unlock the economic potential of much of Scotland’s rural areas. How do you define rural areas within the context of rural broadband?

That is a good question and I am not sure that we have got an answer to it yet. The rural broadband fund in the budget just now is not only for rural Scotland, but it is predominantly for rural Scotland and a key component of the rural development policy, which is why it is within my portfolio. However, my colleague Alex Neil has overall responsibility for the digital agenda in Scotland. We will work together on the rural dimension of that.

The £15 million fund in the budget for the next four years will be crucial in transforming rural connectivity. It is not the only fund. We will top it up with around £25 million from European funding. Of course, there is also our share of the UK funding, which is £68 million out of £530 million, which is woeful in respect of what is actually required for Scotland, given that the areas in the UK that are furthest behind in connectivity are largely in Scotland. We do not think that that is reflected in the formula for breaking the fund up across the UK.

We are concerned that the UK Government is now considering targets that are based on population as opposed to land area. We are getting £68 million from the UK fund of £530 million, yet Scotland covers around 32 per cent—give or take—of the UK’s land mass. We therefore have additional challenges and connectivity costs that we do not feel are reflected in Scotland’s allocation. That debate is continuing between Alex Neil and his UK counterpart.

We will examine the definition of “rural” with regard to who should qualify for those particular funds. It is the same with other funds in my portfolio, such as the fund for food processing, marketing and co-operation grants. That fund is largely rural, but it also delivers support for urban communities: we help food factories and businesses in urban and rural areas, albeit that the fund comes under my portfolio.

The rural connectivity fund will operate in the same way. It will be largely rural but it will cover all areas of Scotland, so I am not sure that we will want to define too strictly who qualifies and who does not.

Can you give us any further information on specific proposals for assigning or spending the funding that has been provided for rural broadband?

Our initial thought was that we would roll out the plans around March 2012. More information will be made available in the next few months.

The next subject is food and drink. Aileen McLeod will start us off again.

As an MSP for the south of Scotland, where we have a fantastic array of local food and drink that is—as the cabinet secretary is aware—a vital element in stimulating our local and regional economy, I am delighted that there is an increase in the budget for the food and drink sector. Can the cabinet secretary outline the type of support that he intends to provide to the industry through that funding? What does he view as the main implications of the increase in that budget line?

I thank Aileen McLeod for raising a subject that is very close to my heart, not excepting the fantastic and outstanding ale, The Grace, which I tasted when I went to Dalbeattie in her region. I will have to buy more of that at some point.

Aileen McLeod highlights the fact that food and drink is a success story for Scotland. I am sure that the committee supports keeping up the momentum on that agenda, on which we have a long way to go yet.

I would welcome the committee’s views at any point in the next few months on how we should allocate that resource. I know that there is a great deal of support in that regard from all parties in the chamber, and we have some ideas at the moment.

We want to support the collaboration agenda, as we think that there is massive potential for linking up the various parts of the supply chain. In the past couple of years we have funded schemes that join up small suppliers, which have led to millions of pounds of new business for many food businesses, but there is a long way to go on that.

We also want to support the export agenda. As the committee will be aware, food exports have in the past few months broken the £1 billion mark for the first time. We know that there are many more food businesses that can grow and expand to meet the demands of the export markets, so that agenda is important.

Food education is important. I think that we all find it unfortunate that many schoolchildren still do not know where the food on their plate comes from, and do not understand many of the associated issues, such as the impact of food on their health or on the environment. We will fund many new initiatives as part of that agenda, and continue to support many of the existing successful initiatives throughout Scotland, with which we are all familiar.

Food and tourism is another big issue. We feel that we can help to boost our rural communities by considering the tourism dimension of food and drink. Again, many exciting initiatives are happening in Scotland, and VisitScotland is working on some ideas to take that agenda forward so that people who visit our attractions and communities throughout Scotland can tap into the fantastic local larder and meet local producers. That can help the tourism agenda.

I could go on for several more hours, because this is quite an exciting subject. I have perhaps given the committee a flavour, but there are many other agendas, such as health and the environment; we also need to ensure that we promote food networks in all corners of Scotland. Aileen McLeod has mentioned some of the good work in south-west Scotland, but there is a great deal of untapped potential around Scotland, and we must ensure that it is exploited.

Such is the appetite for this subject that there are a number of supplementaries. Alex Fergusson can go first.

10:45

First, on the subject of food education, I am sure that the cabinet secretary shares my support of the Royal Highland Education Trust, which does fantastic work in highlighting to schoolchildren the origins of food and how it gets from plough to plate, to coin a phrase.

Like the cabinet secretary, I am a representative of a rural constituency. Another issue that is of great and increasing concern to local producers is food miles. What are your thoughts on the possibility of increasing the number of local abattoirs to contend with that problem and on the hurdles that such an increase would face?

Even this short conversation highlights lots of interacting issues in the food and drink agenda, which have lots of win-wins.

I think that the only food that the convener requires at the moment is a Lemsip. I am sure that we can get that for you; you are suffering.

I could perhaps get something stronger and Elaine Murray might join me.

As well as the food budgets that I referred to, which are more than doubling, there are other food budgets within the SRDP that are not included in that figure. We have protected the food processing and marketing scheme within the SRDP because that is part of the food agenda, which overall we want to promote. If rural abattoirs apply to that fund the application will be considered but, like any other application, the challenge is having a commercial proposition. As the member will be aware, that is a big challenge for many parts of rural Scotland. There are some good news stories out there. New rural abattoirs are being put forward as feasible projects and we already have rural abattoirs, so they are feasible in many areas. We will consider applications for new rural abattoirs.

We are all hugely enthused by the successes of the food and drink industry in Scotland. Significant progress has been made, even over the last few years. It is a great credit to all concerned that they have made a huge success of the industry for Scotland.

I represent Mid Scotland and Fife and would like to put on the record that there are, of course, significant players in the food and drink sector throughout the whole of Mid Scotland and Fife whose produce is greatly enjoyed by people in Scotland and elsewhere.

In the context of the next few years, it occurs to me that many small potential suppliers are not really part of the awakening and perhaps do not know exactly where they should first turn to get in on this significant success story. Can the cabinet secretary indicate whether it is intended to reform the way in which the programme is communicated throughout Scotland to ensure that people have the information that they need about how to get started?

Annabelle Ewing raises another topical point. How we engage with the many new producers that are springing up all over Scotland is something that I, too, am quite frustrated about. When I travel around Scotland, I often meet new producers who tell me that they have started a business in the past couple of years, they have found some niche markets and they are excited about the future, but I am not sure how we are capturing that and ensuring that good support is available for them in the future.

A lot of good things are happening and Scotland Food & Drink is involved in many of these projects. Scotland Food & Drink now works much more closely with small producers, but I think that it accepts that it can do a lot more to help smaller producers and we are speaking to it actively about that. How we deliver more support for small food producers over the next year or two is firmly on our agenda.

A large part of our food agenda that I did not mention in my previous answer is adding value. We must do a lot more in Scotland to add value to our primary products and capture that value in Scotland. Added value will be a central plank of our food policy. We want the primary produce that is reared, grown or produced in Scotland, but we also want to add the value here. It will be of huge benefit to our economy if we can do that.

Some small producers want to grow to become medium-sized or large companies; we must identify and support those, but we must accept that others are happy to be small producers that supply local markets. That is a valuable role, not least for food tourism and strengthening local economies, about which we have spoken. We will cater for small producers.

My question also concerns food—in particular, local food procurement. There have been some fine examples of that, such as East Ayrshire Council, which has been quoted as a fine example all the years that I have been an MSP. Is any work on local food procurement by public agencies progressing at the moment?

Yes. There has been a lot of progress on public procurement over the past few years. Robin Gourlay, who was largely the architect of the success in East Ayrshire Council, was brought into the Government as a secondee to help advise other public agencies and local bodies on it. I await a report from officials on that, so perhaps I can write back to the committee on it. It is a good topic.

We published advice to agencies on procurement and various events have been held to bring together the buyers from local authorities and other public bodies. Local procurement will not happen overnight, but there are many examples of good practice. I am sure that many members acknowledge that some of the local authorities in their areas are doing more to source locally for their schools, for instance. We have to ensure that that approach spreads right across the public sector.

It would be good to see what progress we are making. That is useful, thank you.

We will hear from the cabinet secretary on some of those points. That is good.

I would be happy to get a report from Robin Gourlay and forward it to the committee.

I hope that you will forgive another constituency pitch, cabinet secretary. Do you have any initiatives in mind to support the important soft fruit sector which, as we saw earlier this year, can be dealt severe blows by bad weather?

After this discussion, in which we are all talking about our constituencies, I look forward to a tour with committee members around their various constituencies, sampling local food and drink. Committee members can visit a distillery in Speyside at my invitation as part of that. I am happy to arrange that.

The soft fruit sector in Graeme Dey’s constituency is another success story. I spoke to the sector during the recent bad weather, when the high winds caused significant damage. Thankfully, that damage did not have as much of an impact as many people expected, but it served as a wake-up call to ensure that we help that sector.

We had a good conversation when I visited one of the farms and discussed the fact that we perhaps do not tap in enough to the good news story, which is the health benefits of soft fruit. Apparently, there is scientific evidence that Scottish soft fruit is the healthiest that you can get. We should tell that story, because the country needs to improve its health record.

In light of that, we have agreed to work with the soft fruit sector to find new opportunities for it and to play to the Scottish brand. Many soft fruit growers benefit from that brand, but others are not doing what they should, and could do a lot more to get even more benefit for their businesses, so I am keen to pursue that work.

We have a continuing dialogue with the soft fruit sector and I am happy to keep the committee up to date with that.

I will raise a point that was made forcefully at the Scottish Crofting Federation annual general meeting about making land available for people to grow their own food. New entrants are trickling into crofting and farming, but there is an increasing problem throughout the country with opportunities for people to get allotments. Part of the food and drink revolution is the fact that people want to grow their own. Is it part of your remit to try to increase the number of allotments, perhaps through using public land that is no longer required for its previous purposes or getting land from farmers and crofters? How would making land available in that way affect their benefits?

That is very much a growing issue—forgive the pun. The climate challenge fund has funded a number of grow-your-own projects, and eco-schools throughout Scotland have been creating vegetable patches and allotments, which is fantastic. We have ensured that the climate challenge fund scheme funds a significant number of projects.

A local authority officer recently told me that a major obstacle to having more allotments is the legislation, which is geared towards allotments that have pigs and all sorts of other livestock on them, and is perhaps more suited to a bygone age than to the 21st century. I have given a commitment to pursue the issue and, if the regulations need to be addressed, the Government will have to do that. The approach is currently regarded as bureaucratic and is leading to all sorts of obstacles for local authorities.

Many local authorities have a waiting list for allotments and we know that some local authorities are much more enthusiastic than others about making surplus land available. We need the support of our local authorities and other public bodies. I will be happy to write to the committee to update you on where we are getting to.

That is helpful, thank you.

An interesting allotment project opened in my constituency yesterday, in Kelloholm. It has received financing through the building healthy communities programme, which demonstrates that there are ways of drawing in funding from other parts of the Scottish Government budget. The project involves a partnership between a number of housing associations, the council, the national health service and other people in the community, who have been extremely successful in securing funding in an area that is high on the index of multiple deprivation.

Thank you for the information. I will get some information on the project, so that I can understand how it was put together.

That is excellent. Thank you, cabinet secretary, for your answers. I am sure that in the second year of the budget process we will have many more supplementary questions. The committee has been pleased to get started on its consideration and I thank all our witnesses for their efforts.

10:57 Meeting suspended.

11:00 On resuming—