Subordinate Legislation
Nitrate Vulnerable Zones (Grants) (Scotland) Scheme 2003 (SSI 2003/52)
Item 6 is consideration of a piece of subordinate legislation that is subject to affirmative procedure and requires the Parliament's approval before it comes into force. I welcome to the committee the Deputy Minister for Environment and Rural Development, Allan Wilson, and Executive officials James Shaw, Frances Reid and Neil Sinclair.
The normal practice for considering a statutory instrument is that, before the minister moves the motion, members have the opportunity to ask the minister and his officials questions. Before that, the minister will have the opportunity to make introductory remarks about the scheme. If members want to ask Executive officials questions, they must do so before the minister moves the motion, as officials are not permitted to participate in the debate on the motion.
I welcome the opportunity to introduce the nitrate vulnerable zones grant scheme. By agreeing to recommend the scheme's introduction, the committee will offer many farmers the opportunity to access public funds. That will assist them in fulfilling NVZ action programme requirements.
The scheme delivers on the commitment that the Scottish ministers gave in March 2000—almost three years ago—to introduce a 40 per cent grant scheme to help farmers in areas that are designated nitrate vulnerable zones. At that time, an undertaking was given to discuss the scheme's detail with the industry, with the proviso that the scheme would be designed to assist farmers who needed to change their business practices to protect our water environment. We have subsequently consulted those who are most likely to have an interest in the issue on the scheme's principles and on the proposed Scottish statutory instrument. In reaching a view, our objective was to target the grant scheme to help farmers to comply with the requirements of any NVZ action programmes.
Where do action programme measures come from? As members know, they are designed to minimise pollution from agricultural activity. The nitrates directive requires member states to identify and designate zones and to put in place mandatory measures to reduce inputs of nitrate pollution. The directive further identifies features that all action programmes must have. The scheme that is before the committee was formulated on those compulsory measures.
One of the most significant aspects of the compulsory measures that will impact on a farmer's business is the need for sufficient manure and slurry storage during closed periods. As members know, closed periods are set periods when organic manures and slurries cannot be spread on agricultural land. The cost of the provision of storage during the closed period, when they cannot be spread, can vary considerably, depending on the facility that is required, but it will more than likely involve a significant capital outlay for most businesses that require to make that change. That is why we have designed a scheme to meet that need.
The powers to introduce the capital grant scheme come from section 29 of the Agriculture Act 1970. The scheme that is before you today does not go into the details of the elements that make up the grant scheme. Rather, it provides the regulatory framework in which we wish to operate. It sets out the procedures in relation to applications for grants and their determination, but the details of what is included and how applications will be assessed are given in the guidance document, which is attached.
An applicant must have some land situated within a zone. Provision for the payment of a 40 per cent grant for eligible work is subject to the condition that the expenditure on the work does not aggregate in excess of £85,000. Administration will be done on a tranche basis, and unsuccessful applicants in a particular tranche will be able to submit another application in subsequent tranches. A ranking system will operate to ensure that priority is given to applications from those who have the greatest need to improve their storage facilities, and it is expected that there will be at least one tranche in each financial year that the scheme runs.
Grant assistance to meet storage needs will be limited to the greater of the current stocking levels, and the average stocking levels during the previous 12 months. The scheme will be time limited to five years, and there will be a process to allow for representations from applicants where Scottish ministers vary the approval or amend the conditions that are attached to the approval of an application. Last, but by no means least, there will be a process for appeals where Scottish ministers propose to withhold, reduce or recover grant moneys.
As the committee will see, the grant scheme does not specifically define the geographical area to which it applies. That is covered by the cross-reference in the scheme to the Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003. By not defining the specific geographical area in the proposed grant scheme, should there be further designation of nitrate vulnerable zones, they too could be included within the scheme without the need to come back here and make a further Scottish statutory instrument.
The scheme has been submitted to the European Commission to ensure that it complies with state aid rules. Although we have not received confirmation, we believe that the scheme will meet such requirements. No decisions on applications to the scheme will be made until such time as that clearance has been granted, but we intend to launch the scheme on the successful completion of the Transport and the Environment Committee's scrutiny and the parliamentary process, but with that important proviso.
In conclusion, I welcome the opportunity to be here. My colleagues and I will try to answer any questions that the committee has about the scheme. The farming industry has been aware of the prospect of the introduction of a grant scheme for some time. As I said, we originally indicated our intention in March 2000. Many farmers who are located in the areas that are affected by nitrate vulnerable zones will welcome the scheme, so that they can get on with changing or improving their slurry storage facilities in a way that will help them to meet the requirements of the action programme, and help to improve our water and related environment as we seek to introduce closed periods for slurry waste distribution.
Four members have indicated that they wish to ask questions. I will take them in the order in which I saw them.
Minister, did you say that the instrument would give you the power to expand nitrate vulnerable zones without the introduction of further SSIs if you felt that that would be appropriate?
I said that the SSI is not location-specific and is written sufficiently broadly so that if another area were designated, the farmers in that zone would have the opportunity to apply. It is not about designating additional zones.
I appreciate that you would not designate other areas.
I have two principal questions. First, will that scheme be adequately funded? Secondly, can you assure me that if any farmers are unable to access the funding to which they are entitled simply because the Government has been unable make the 40 per cent funding available in the tranche-bidding system, those farmers will not be prosecuted?
The scheme is adequately funded: £6.8 million is available in 2003-04; £4.8 million in 2004-05; and £5.8 million in 2005-06. In anybody's language, those are considerable sums. It is difficult to estimate the total likely demand because several factors will influence it. The grant will be 40 per cent of eligible expenditure with a maximum of £85,000 for each business—equivalent to £34,000, in grant terms. It has been pitched at a level that meets the aim of funding as many projects as possible using available resources. The use of those resources will depend on the number of applications received and the level of grant required. We will have to see how the process develops. Obviously, the scheme will add to existing storage facilities and perhaps update them or create new ones that are designed to improve the water environment.
I accept what the minister says and the spirit in which he says it. However, if everyone who applies for the schemes in the first year is not accepted because of the cap on funding, I seek an assurance that he will not take action against people who wish to upgrade their premises but are unable to do so simply because their grant application has been unsuccessful.
The member has raised a hypothetical scenario. We cannot give any categorical assurance about the future application of the scheme. All I can say is that the scheme is designed to assist farmers and involves a significant sum that will enable them to make adequate provision for slurry storage during the closed period, so that they will not find themselves in the situation that he describes.
Who is to say how an individual operator will act? I cannot give a blanket assurance that suitable action would not be taken at some stage in the future if the provisions of the scheme were being abused, ignored or whatever. The scheme is designed to be applied flexibly so that those in greatest need will have greatest access to it. I do not anticipate the problems that the member envisages.
The action plan seems to be detailed, sensible and workable.
My question follows on from that of John Scott. Has any attention been given to the possibility of retrospective grants for farmers who find that they did not manage to get a grant from their first application but have nevertheless seen it as sensible—and their duty—to proceed with upgrading their storage facilities?
The short answer is no. If the committee approves the SSI today and the EC approves the scheme as complying with state aid rules, we will give farmers who make unsuccessful applications in the first tranche the chance to make subsequent applications in the second and third tranches. The money will be allocated according to the greatest need, as far as existing storage facilities are concerned. A scoring system has been designed to rate applications. However, farmers who have installed facilities prior to the introduction of the scheme will not be entitled to any retrospective grant assistance.
Will you issue clear advice to farmers that it is important for them to get their feet on the ladder at the beginning and apply in the first round?
Yes. The advice that we are giving has been circulated to members of the committee.
I presume that you are not just plucking out of thin air the figures on how much money will be necessary and that you have a good idea of how many farms are affected and what work needs to be done. I also assume that the money that you are allocating is going to cover the need.
The Scottish Agricultural College's risk impact assessment for the action programme regulations suggests that the estimated cost of storage for the one-month closed period that we are talking about will be between £4.42 million and £6.32 million.
There are approximately 12,000 holdings with land in the designated areas. However, without looking at each farm and surveying all their individual requirements, it is not possible to give a definitive figure for the number of businesses that will need assistance to comply with the measures. We have based the scheme on expected requirements arising out of the risk impact assessment. We will obviously monitor and review the situation in the initial years of operation.
As I said to you in the tea room, you have a difficult job. If someone says that there is not enough money, but the WWF says there is too much, the balance is probably right, somewhere along the line.
There is competition for the money because the process is cash limited. There must be some concern about whether the level of resource available will be able to meet the demand created by 12,000 potential applicants. I would like you to reflect on that a bit more, particularly in view of the experience of the rural stewardship scheme that saw many more applicants than were able to secure resources.
I am concerned that the farmers should not be faced with the same culture of bureaucracy and form filling only to find that they are unsuccessful, which might put people off applying in future years. That might suit the Government's budget but it is not necessarily a good process. What can be done to keep the load of bureaucracy as light as possible? One of the biggest gripes I hear from farmers is about the amount of paperwork they have to undertake.
The background paper also says that the scheme will be available for all nitrate and phosphate pollution areas and point sources. Before NVZs came along, areas of Scotland such as Forfar loch and Loch Leven had become phosphate rich and had algal bloom problems. Will farmers in those areas be able to apply for grants under the new scheme? If so, were they included in the 12,000 separate businesses?
The ranking system will be important. Will it be made available to farmers before they apply, so that the process is as transparent as possible and allows farmers to decide whether applying is worth while?
Finally, £6.8 million cannot be magicked out of the air. It is not easy to find that level of cash. Have you had to re-examine any other budgets to divert resources from them to make the £6.8 million available in the first year and the other sums in subsequent financial years? It would be interesting to find out what commitments have been made and their effect on other matters.
I apologise for asking so many questions.
It is strange to be lectured by a nationalist on finding money out of the air, given the spending commitments that usually emanate from the nationalists. The Executive is providing new money. We are not borrowing from Peter to pay Paul. A bid was made in the spending review for additional resources to meet the cost of the scheme, so it is a product of the Labour Government's successful management of the economy, which has allowed us to pay farmers additional sums.
Oh dearie me—forgive me if I yawn, minister.
You asked the question.
It is possible that more farmers might feel that their current storage capacity is sufficient to enable them to comply with the closed period requirement in the action programme regulations. If so—good grounds exist for believing that that should happen in some cases—the pressure on available resources will reduce. In that way, we will be able to fund grants to a higher percentage of applicants. That is self-evident.
The impact assessment that the SAC prepared suggested that 23 per cent of dairy farms and 55 per cent of pig-breeding farms have one month's storage capacity or less. That is only an estimate, and the nature and size of storage requirements vary widely, reflecting the different sizes of businesses and the mix of enterprises. It is difficult to predict the demand that has to be met from the additional funds. However, appropriate advice will be given to applicants—you asked about that—on the criteria that will be applied in assessing their applications, so they will be forewarned about the likelihood of success.
Did you have another question?
It was about the level of bureaucracy.
In the circumstances that you describe, a farmer in an NVZ would be eligible to apply. The consensus is that the level of compliance would be considered in conjunction with the action programme regulations, which are the responsibility of a different department from that which my colleagues represent, which is responsible for preparing the scheme. Perhaps we could pursue the matter with that department.
Can we make the level of bureaucracy and form filling as light as possible?
That is my point. I have looked at the form, which is about 14 pages long, and it struck me as fairly bureaucratic. When dealing with such a level of disbursement of public funds, it is important to have all the relevant details on paper, but the officials who are present are responsible not for the scheme's implementation or its bureaucracy, but its preparation.
Although the minister does not anticipate that Europe will regard the grants as unlawful aid, can he give me an assurance that, should that prove not to be the case, he will not seek the return of grants from affected businesses?
The grants will not be paid out until such time as we get that approval. As I explained, we will make an announcement to Parliament about our intent following today's meeting. No moneys will be paid out until the EC position has been secured.
Is the minister absolutely certain that the figure for affected holdings is as high as 12,000? By simple arithmetic, such a figure would suggest that there are in the region of 100,000 agricultural holdings in Scotland. I was not aware that there were so many. Did the minister mean 1,200 affected holdings, by any chance?
No. I think that the risk assessment gave the total number as 12,000. However, as I said to Bruce Crawford, we do not anticipate that all those holdings would require or seek assistance. The amount requiring assistance depends on what percentage of the total makes an application. Applications will be assessed according to the ranking system that we have established to determine the priority for the grants.
If there are no more questions, we shall move on to the debate. I offer the minister a further opportunity to speak to motion S1M-3895, in the name of Ross Finnie. He should then move the motion.
As we have discussed, the introduction of the action programme measures will mean that of the total that we have described, some farmers will be required to invest in their slurry and manure storage. The 40 per cent grant scheme will allow those farmers access to public funds to help them meet those requirements.
Obviously, our priority will be to help those who are most affected. However, if businesses that currently meet the action programme requirements want to replace or improve their current storage facilities, they will also have access to the scheme. Therefore, we will need to determine priorities among applicants.
We know that many farmers will welcome the assistance that is being provided. If farmers who find themselves within an NVZ are required to make the necessary upgrading to their slurry storage facilities, they should be able to seek grant assistance if the committee approves the SSI.
I move,
That the Transport and the Environment Committee recommends that the Nitrate Vulnerable Zones (Grants) (Scotland) Scheme 2003, (SSI 2003/52) be approved.
Do any members wish to speak to the motion?
After all the hassle that we have had over the scheme, I welcome its introduction and the fact that the grant level will be 40 per cent. As Bruce Crawford said, some people think that 40 per cent is too much and some think that it is too little, but I suspect that the figure is probably reasonable. I also welcome the introduction of the appeals procedure, which will be valuable, and the reduction in the closed season, as it were, for the spreading of slurries. At a later date, I will come back to the minister with a question on the number of agricultural holdings in Scotland.
No other members wish to speak. I presume that the minister does not want to respond.
No. The figure of 12,000 is based on the advice that I have received, so I assume that it accurately reflects the total number of holdings within NVZs.
The question is, that motion S1M-3895 be agreed to.
Motion agreed to.
That the Transport and the Environment Committee recommends that the Nitrate Vulnerable Zones (Grants) (Scotland) Scheme 2003, (SSI 2003/52) be approved.
We will report to the Parliament that the committee recommends the approval of the instrument. I thank the minister and his officials for giving evidence today.
Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003 <br />(SSI 2003/51)
I suggest to members that we take the other item of subordinate legislation before bouncing back to earlier items on the agenda. Item 7 is the Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003 (SSI 2003/51), which is a negative instrument. No members have raised any points on the instrument, and there is no motion to annul. Is it agreed that the committee has nothing to report on the instrument?
Members indicated agreement.