Official Report 170KB pdf
Item 2 is our evidence session on the budget. I welcome Professor Kenneth Thomson, who has been appointed as the committee's adviser to assist in the scrutiny of the budget.
I will be brief. I acknowledge that we have brought a lot of officials but, given that the portfolio has such a wide scope we wanted to be sure that we could, as far as possible, answer any questions that the committee has. We will give as much factual information as we can. If there are any questions that we cannot answer, we will be pleased to do so as soon as we can after the meeting. The portfolio draws in significant European Union resources, therefore its scope is fairly broad and its impact on rural Scotland, in particular, is fairly significant.
Thank you.
Ultimately, of course, it was arrived at by a decision of the Cabinet. The balance of expenditure is intended to support the programmes that are planned for next year. Decisions were taken on the basis of the funding that was available and the programmes that it was intended would be supported. If any of my colleagues want to expand on that, I would be happy for them to do so. David Reid might have something to add on capital.
The portfolio does not have a large amount of capital, and the incidence of capital can be uneven from year to year. There are capital grant schemes that go out, notably through the Scotland rural development programme, but in other respects capital tends to be allocated when the portfolio has a capital requirement. One or two capital requirements are recognised both this year and next year, but, given that the portfolio benefited this year from the capital acceleration arrangements that the committee might be familiar with, next year it will have to repay some of that extra funding. That is a peculiarity of the capital budget settlement for 2010-11.
So you are saying that, in line with Government policy, capital was brought forward, but there is not all that much in the capital programme for rural affairs and the environment.
Yes.
Does most of the capital expenditure relate to the Scottish Agricultural College?
As well as the capital grants that go out to agricultural businesses, capital is provided for other projects, such as marine projects. There is also the funding that goes to the science sector and the capital that is incurred by the various non-departmental public bodies that the portfolio supports, but capital expenditure is not a significant element of the portfolio's budget.
The budget for rural affairs and the environment in 2010-11 is 6.7 per cent lower than was planned for last year. Can you give me a general overview of how that drop in planned expenditure will be absorbed? Will it be absorbed by the public bodies, by the use of centrally administered Government funds or by a mixture of both?
The answer to that is fairly detailed, but I am happy to give it, if that would be helpful. The descriptions on pages 110 and 111 of the budget document show that sums of money have come into and gone out of various lines. I suppose that the most significant of those is the transfer of £25.3 million, and then £26.3 million, from zero waste to local government. That money is still available; it is simply accounted for in a different budget line. If you wish, I can provide you with a table that describes those changes in more detail and shows how they reconcile with the budgets that were presented in last year's draft budget. The actual decrease in expenditure is £8 million. The rest is accounted for by transfers, which are set out in some detail in the budget document. I can give you information on all the transfers, if you want.
It might take a bit too long to do that now. It would be helpful if you could provide some written evidence.
I would be happy to share the table that I mentioned with the committee.
That would be helpful.
I have a question about a figure that I presume is buried in the EU support table: the one for the scheme for new entrants into farming. I know that it is £10 million spread over a period, but last year the cabinet secretary said that the Government would reflect on whether it could provide more funding—I realise that that might be difficult under present circumstances. We asked whether the adequacy of the funding could be assessed. Has that been done yet? Can you give us any feel for the take-up and whether the funding will be adequate to meet demand?
The scheme was based on supporting interest payments. With the changed financial circumstance, that is not looking quite as apt a design as when we introduced it, so we are reviewing whether we can attach any element of grant to the scheme. I do not think that the problem is insufficient funds and too much take-up; the problem is that the measure is not as well designed to support the need as it could be. There are limits to what it is competent to do within the European framework and that is what we are exploring just now.
The objective of the fund was to attract new entrants, rather than simply financial. What assessment have you made of its success and its likely future success?
We have not done a formal evaluation, but we do not think that we are getting the take-up that we had hoped to get, so we want to try to fashion something that has more impact.
One of the reasons for the take-up rate is that, with low interest rates, there was less benefit for people, so applications were low. We want to resubmit the scheme to Europe to find a way to increase the interest rate subsidy.
It could be that new entrants are coming into the industry without the scheme, in which case, we would not need one. Has any assessment been made of that?
We could certainly look into that and get you the information.
I would have thought that, before we introduced a scheme or decided to change it, we would consider whether one was necessary.
There is a strong commitment to increasing the number of new entrants. As Peter Russell and Gill Tucker said, the scheme was designed against a particular set of circumstances. I would be giving nothing away if I said that we have a strong commitment to try to continue to increase the number of new entrants and the quality of their input. We certainly want to design the scheme to ensure that that happens.
We have a figure for the total funding of new entrants across all the options in the SRDP. Over the period of the SRDP, about £2.5 million of funding has gone to new entrants. About £520,000 of that is against the interest rate scheme.
Do we have figures for new entrants per se? Is that available historically anyway for comparative purposes?
There were about 15 eligible applications.
Did you say 15?
Yes.
Obviously interest rates are no longer a barrier—perhaps they never were. What are the other barriers to new entrants coming into farming? With the best will in the world, the scheme is not experiencing a huge uptake, given the publicity that it has had. I am certain that the committee was of the view that there were more new entrants coming in. With the plethora of expertise that we have in front of us, can we have a view as to what the other barriers might be?
I ask Peter Russell to comment on that first.
I do not want to offer a deep analysis, but there was an interesting piece in The Scottish Farmer in which the factor on Bute explained why it was not simple for five vacant lets to go straightforwardly to new entrants. It depends on the individual circumstances in each case, such as whether there is a house to go with the tenanted land or whether it makes better sense for the neighbouring farms to expand their holdings and become more resilient and commercially viable by getting a bit larger. All those factors are in play in different ways in different circumstances. A lot of succession takes place within families, so it is not always easy to spot the point at which a new entrant is, in practice, in charge of the farming business. I doubt that we will ever capture that information comprehensively. The circumstances in different locations influence whether there is an opportunity for a new entrant or not.
That is true. Most estate owners whom I have come across will give the existing tenants a chance to increase their acreage. Do we have a list, or do we know what the demand is from new entrants? How do we know how many people want to go into farming but face issues with getting land and getting a start?
I am not aware that we have any means of capturing that, to be honest.
It seems a bit weird to have a scheme if we do not know whether there is a demand for it. We know that—
There is the question of demand for the scheme and the question of people who want to enter the industry. We can capture information on people who apply to the scheme, but I took it that you were referring to the number of people who aspire to enter the farming sector for the first time. People do not apply directly to the Government for that.
Tenancies are still being transferred. It is just that new entrants are not necessarily coming along in the way that we might hope. Is that fair?
I am sure that that is true.
I want to follow up on the convener's question. In our discussions last year, the industry told us that it needed a beefed-up new entrants scheme and the cabinet secretary said that he was prepared to consider where there was extra demand that needed to be met and that any savings in the budget would be deployed across the department. However, the picture that you are painting now is that the scheme is underused. Has there been a change of view in the past 12 months, or has the expectation always been that £10 million across the spending review period was more than adequate to meet demand?
We have had a year's experience. Gill Tucker gave you the figures for the take-up so far, but £0.5 million does not begin to approach the pro rata take-up of £10 million over the piece, so we are not quite getting to where we should aspire to be.
If I understood correctly, you said that there have been 15 successful applicants, which accounted for £2.5 million. How many unsuccessful applicants have there been? I want to get an idea of how many people are not getting opportunities from the scheme because it does not quite meet the requirements.
We do not collect those figures on new entrants. In approximate terms, something like 85 per cent of applications are successful.
Are there any trends among the unsuccessful applicants? Are they looking for something specific that the scheme does not offer?
We do not collect those figures, I am afraid.
To develop that theme, might more new entrants apply if the criteria were relaxed? You would expect to have successful applicants because people will try to match the criteria. For example, if the age at which people can apply as a new entrant was increased, might that lead to more applications?
We do not have control over some of the criteria because they are regulated by Europe. For example, a new entrant is classified as someone who is up to 12 months into starting up a business. That restricts the number of people who can apply. However, we have no control over that. We cannot alter the regulation.
What is the age limit?
I do not have that information, I am afraid.
Many potential new entrants would be unable to come into the scheme at a young age because they would not have built up sufficient capital. They might be caught in that trap if the age limit is 40 or 45. People might spend a long time working as a contractor and building up their capital only to find that they are then too old to get in as a new entrant.
Would it be helpful if, in response to the questions from Mr Scott and others, we provided a note that explained the criteria of the scheme and the uptake so far? I am sure that we could examine the applications that were rejected, given that the numbers are not high, and bring to the committee's attention anything that we draw from that.
That would certainly be helpful. It would also be helpful for the committee to sound out the views of the industry, which has expressed disappointment at the level that has been set for the new entrants scheme. It is clear from what you have said that there is not a large uptake. The industry may have a view on why that is the case, which we should perhaps seek to elicit.
I will ask about two aspects of the SRDP. I will move on to ask about the European funding of the programme in a moment, but first I want to discuss the expenditure profile. In the current year, is the programme generally running according to the expenditure profile that you expected? Is it ahead of or behind the profile? What would be the implication of either of those things for the year that we are moving into?
The programme got off the ground late: it was meant to start in 2007, but the European Commission was rather late in approving it, so the first round was not until April 2008. I am giving you that background because the budget is profiled over the whole period of the SRDP, up to 2013. It has been agreed with the Scottish Government that that is how we should profile the budget so that there is a spread of availability of funding to the end of the period. Over the period, we have about £1.5 billion to give to the programme, and that is profiled after every round of the SRDP.
Was that what you expected to commit at the beginning of the financial period?
Yes. We have to limit the amount that we issue in each RPAC round. We do that by setting a cut-off point with regard to the points that people have to score to get funding so that we are sure that, once they have met the basic criteria, there is a threshold above that that will draw down the funding.
So, in effect, you regulate the number of applications that get through in order to match the available budget?
That is what we do, in essence.
So for the current financial year you are on target—rather than above or below it—to meet your expectations?
That is correct.
And there is no implication that that will vary in next year's budget?
No.
My next question is on all this rather intricate stuff around the exchange rate for co-financing, which helps to determine to what extent the rural development programme needs to put its hand into the Scottish Government's pocket, so to speak, and to what extent that money comes from European funds. I am reliably told by my colleague on my right—Liam McArthur professes to understand these things, but I had better check to confirm that I am not being misled—that the date for fixing the exchange rate is today. Is that the case?
Yes, that is correct.
Is today's exchange rate what was expected when the draft budget was printed? Has there been any gain or loss relative to that, or is that not an issue?
The exchange rate has moved quite a long way. When we first submitted the programme, we assumed an exchange rate of €1.46 to the pound. The current exchange rate—I have not actually checked today—is around €1.10. The rate has moved quite a lot, which means that we will get more pounds for our euros. My team has visited Brussels to work out how best to take advantage of that, but some learning is still going on in Brussels about what the right mechanism is. Instead of changing the implied exchange rate, we will change the co-financing rate because Brussels implies that that is the best way to deal with the issue. We will increase next year's co-financing rate, which will give us higher spending power in next year's programme.
The note accompanying table 6.03—on page 112 of the draft budget document—clarifies that the co-financing rate
The change will mean some tens of millions of pounds—perhaps £40 million or a bit more—of extra spending power next year.
Can that £40 million be used only within the SRDP range of programmes, which are marked with a small "2" in table 6.03?
That is correct.
So none of that extra funding can be taken outwith the SRDP to other schemes, notwithstanding the fact that the funding is, so to speak, Scottish Government money.
That is correct.
What is the implication for planned spending if we suddenly have that windfall of £40 million or £50 million? Does that mean that the programmes can increase, or will the money be reserved for future programmes? What policy approach has been developed on that?
We will try to achieve a sensible curve across the whole of the programme so that we do not get an exaggerated spike in one year. I think that 2011 will represent the peak draw-down of euros. My colleagues need to manage a number of European rules to ensure that we draw down all the available euros within the programme period.
Obviously, exchange rates can fluctuate so it is probably wise to include some sort of cushion in case the rate runs the opposite way, but that would need to happen to quite an extent for there to be a negative, rather than positive, result.
That is correct.
Technically, the money can be carried forward for as long as the Government chooses. Therefore, the money could be used to offset further reductions in Scottish domestic spend on the programme. In effect, the current level of spending power could be maintained without the need to find more Scotland-based cash.
The programme is co-financed so, if domestic money was not spent, the collateral would not be available for drawing down. Detailed rules such as N+2—of which I am not the master—give points beyond which access to those euros is lost. We are in a reasonably favourable position just now, because we can draw down more next year.
So the lower exchange rate does not signal a bonanza for rural communities, in part because the funds are managed over four or five years with a cautionary look to what might happen to exchange rates further down the piece.
Catch-up is a better way of looking at it. Because of the slow start to the programme, to which Gill Tucker referred, 2007 was in many ways a lost year—there was no facility to kick off new investments in 2007. We are now able to make good some of the time lost at the outset.
The inflation rate is lower than we anticipated when projections were made last year for the current year's budget. Significantly, the gross domestic product deflator is different. What impact does that have on how you manage the programmes? Unlike other public spending, the programme is not full of salaries increasing at, say, 3 per cent. What impact, if any, does the lower inflation rate have? The cash does not change, but do you have more buying power?
Absolutely.
Do you adjust programmes down to compensate for that in any way?
No. The supply of available euros is fixed, so we have slightly more buying power than we might have supposed at the outset.
So nothing is done on the inflation front to revalue the programme.
Absolutely not.
You suggested that spending under the SRDP is on target. I am aware that there were concerns locally that the cut-off point was set quite high and that the level of rejected applications was likely to be unacceptably high, as a consequence. I welcome the fact that the cut-off point has been revised; as you said, the figures are quite encouraging. However, there is concern that the requirement for applicants to apply online has dissuaded certain farmers and crofters from applying for rural priorities funding. How is that captured in the figures?
In parallel with the budget figures, we have an on-going action plan to put in better facilitation services in order to improve take-up of the programme by those who may have been disfranchised. A written application process is not possible—the scheme is designed as an online programme. Our approach is to give people access to free facilitation and advice on submitting their applications.
There is still concern that the online requirement will dissuade certain smaller units and encourage greater spending on consultant fees.
The efficiencies to which you refer will not affect the action plan to improve delivery of the programme.
Does the move to a co-financing ratio of 50:50 mean that the Government will be able to withdraw funding from the RAE budget? Are you in a position to resist that? As a farmer—it is only right and proper that I declare an interest—I would like as much money as possible to remain in the RAE budget.
This budget takes us only to 2010-11, and there is big uncertainty about what will come after. However, the assumption of an exchange rate of £1 to €1.46 is providing an extra and unanticipated benefit and, indeed, is working wholly to our benefit just now.
I think you are avoiding the question, but I am not quite sure how to rephrase it. If the Scottish Government decides to reduce its contribution to the RAE budget because of the windfall gain from Europe, is that just a fact of life?
The plans are not based on a reduction in the Scottish Government's contribution—
I am talking about next year.
We do not intend to do that next year, either.
On research, analysis and other spending, how will research plans relate to Scottish Government priorities, policy statements and performance monitoring?
We are currently working to a five-year research strategy that began in 2006 and runs to March 2011. In addition to the main funding under the "Programmes of Research" budget line, we have a contract research fund, which enables us to be more flexible and reactive to policies. Indeed, twice a year, our policy colleagues can submit proposals for bits of evidence that are required to meet short-term needs and, in some cases, to monitor the operation of certain policies.
Do the research strategies take climate change into account?
Indeed. The current strategy contains a cross-cutting theme on climate change, and over the period of the current five-year programme—and increasingly as the Climate Change (Scotland) Act 2009 made its way through Parliament—we have involved scientists in the field in consultations with our policy colleagues.
Indeed. I note from our paperwork that it appears that local government and the national health service are, unexpectedly, far greater contributors to carbon emissions than, for example, the RAE budget. I would have thought that the research community might look into that. Is it offering the benefit of its research to the NHS and local government? Is it in a position to do that? If not, can it farm out that carbon reduction work?
I am aware that the Macaulay Land Use Research Institute works with local government, as do, I believe, our other main research providers. Indeed, I spoke to someone from Aberdeenshire Council who said how good it was to interact with the institute on getting evidence on how the council could reduce its carbon emissions. I cannot answer your question on the NHS, I am afraid.
Thank you. That was helpful.
As you will be aware, the committee is in the midst of its deliberations on stage 1 of the Marine (Scotland) Bill. At first reading, the reduction in the marine and fisheries budget from £79.7 million to £69.6 million looks to be a little alarming. However, from reading through the papers, it is clear to me that that reduction is the result of capital spending being brought forward, particularly in relation to the fish and veterinary aquaria facility. Can you provide a little detail on what has been aggregated under the Marine Scotland budget but which was separated out in previous budgets into fishery research, the Scottish Fisheries Protection Agency and marine management? Perhaps you can provide reassurance to the committee about how those budgets are being protected under what is proposed.
As you say, the place to start is the net position over the two years once we strip out the effects of the capital acceleration for the aquarium. For 2009-10, there is £63 million, and for 2010-11, there is £64.1 million. If we consider that in the context of the Marine (Scotland) Bill's financial memorandum, the expectation is that the cost increase next year from implementing the bill will be about £1.5 million. Obviously, we must take into account a number of other factors in comparing the two years, which means that it is not straightforward. Such factors include pay increases for the staff—about 50 per cent of Marine Scotland's costs are for pay. We must also consider both the efficiency savings that will come through because of Marine Scotland and our one-off costs—for example, the compensation scheme this year for the infectious salmon anaemia events up in Shetland.
On science, I was interested in Maggie Gill's response on broader research. Table 6.04 in the draft budget document shows budgets for programmes of research. The budget for them is going up from £66.9 million to £74.8 million, but there does not appear to be any reference under the marine and fisheries section to proposals on work to improve the scientific underpinning of public policy over the next year. You will recall that the committee had concerns about the scientific underpinning of policy in the run-up to the fisheries council last December, particularly in relation to the west coast. It is slightly disappointing that that is not central to the objectives in the coming year. Can you say anything about the budget deployment or the policy objectives that will provide reassurance about that?
On fisheries activity, in the light of the difficult situation on the west coast, one of the priorities has been to improve the science base on that coast. There has been additional observer activity, and additional scientific trips have been made in order to gather additional information. Obviously, we are not talking about a short-term process; a stronger picture cannot be established overnight. The committee will be aware that getting an understanding of exactly what is happening on the west coast is not straightforward. The primary reason for the stock difficulties does not appear to be fishing.
I accept that and I note that there are funds for further trials of selective gear, which is linked to that. Do you accept that it is an oversight that scientific underpinning does not feature a little bit more prominently in the objectives for the coming year?
I confirm that that is an on-going priority. We may be able to focus on that.
I want to move on to natural heritage issues. Last year's budget contained a projection of what the coming year's budget would be. I understand that there is a difference of around £4.3 million between what you projected last year that you would spend on SNH and the Deer Commission for Scotland, and what you actually plan to spend. Is that the case? What are the pressures and budgetary implications for SNH and the DCS once they are combined, assuming that that happens? What is likely to give?
The difference is about £1 million. Nonetheless, there is a bit of an uplift in the baseline from moving from this year to next year. People will not observe a dramatic impact on what can be done; rather, the impact will be marginal. It will probably force the issue on use—by SNH in particular—of the grant power, in order to ensure that, in spending the grants budget, best value for money is achieved.
SNH is staff intensive. Is it unlikely that its staffing will be dramatically affected? Is it more likely that there will be pressure on more flexible items such as grants, which will affect others?
Yes, I think that is right. You will be aware that a budget transfer from SNH to local government has kicked in, whereby money that supported ranger services, access and so on has been moved. SNH is no longer engaged in those activities, and the resources for them have been transferred to the local government settlement.
Okay. My next question is on a separate issue and concerns vets and veterinary surveillance. The difference between the projection that was made at this time last year, in looking forward to the coming financial year, and where we are now, is that there will be about £500,000 less for veterinary surveillance, although in cash it looks as though it is about £100,000 more. What did you expect to spend the missing £400,000 on, had you got it?
I would not like to see it in that way.
I am sure that you would not.
We have got value from the spend in unexpected ways, with the likes of bluetongue arriving, which really showed the hidden value of the standing arrangements. The money is spent through the SAC to maintain on-going surveillance, so when bluetongue arose, we had in place the mechanisms for picking up on the likes of midges and the rest. To be honest, there are probably still efficiency questions to address in that area. However, we have had a change of chief vet, so we have not been rushing our fences on that. We want to ensure that we are still getting the best value out of the budget.
You have slightly anticipated where I was heading. There is a constant need for vigilance in the face of diseases such as bluetongue in animal stock. Significant problems are also developing with honey bees, with the on-going problem of the varroa mite and with outbreaks of European and American foul brood. In recent weeks, treatment has been given—it is probably being given right now—to bees before they begin their winter hibernation, although "hibernation" is not the right expression. When they awake in the spring, there will be a need for intense surveillance to ensure that the antibiotics have worked and helped to control the disease. That implies that there will be additional pressures on veterinary services on that front alone. Are you confident that the available budget will allow you to cope with all that, given that there are various other things, including bluetongue, that you need also to keep an eye on?
Yes, in so far as we can see the way ahead. The bee inspectors belong with the rural payments and inspections people, as their role has been cast with the agricultural specialisms. When it comes to bee inspection, the weight of the staff input does not fall on our budget, but on the budget of Gill Tucker and her colleagues, who have been the first responders. They have received professional veterinary advice from within my directorate, but the actual resource that has been deployed has not come out of our budget.
Perhaps I had better ask Gill Tucker whether she is prepared for that extra work coming out of her budget. Nevertheless, I presume that the problems with bees give rise to extra work for lab services and require veterinary input, in which you have a continuing role.
Yes—but it is not making a significant impact on our capability at present.
From our regional offices, we have put in place the capacity of about four additional inspectors, which is within the budget.
Will that be maintained in next year's budget?
Yes.
Let me take you back to bluetongue. You referred to the need to maintain a strategic surveillance network, not just for bluetongue but for a range of exotic animal diseases. We would all accept the need for that. What is the view of officials or the Government on what that strategic network should look like?
I do not, at present, have a view. I referred earlier to the idea that there might have to be a further review of all this relatively soon, as part of the routine best value business of ensuring that the arrangements that we have still offer best value today. However, we have not embarked on that, and I have no prior view on what the outcome might be.
The unfortunate thing is that, preceding that review, decisions about what the network looks like and how the surveillance is carried out are being taken on the ground. Therefore, there is a greater need to get that review sooner rather than later.
Okay. Thank you for that.
I have a question about cost sharing and veterinary surveillance. Will budgets be transferred from the UK Treasury and/or the Department for Environment, Food and Rural Affairs? How is work developing in order that there will not be an extra burden placed on the industry?
There are two dimensions to that question. First, which costs are financed by the taxpayer and which are borne by the industry? Secondly, which budgets are held on a Great Britain basis by DEFRA and which are devolved to Scotland and Wales? We are working with DEFRA with a view to starting the transfer from DEFRA to the devolved Government of animal health budgets. That dialogue is on-going. Our ambition is that a start should be made from 1 April next year, but it will probably not all happen in one lump. There is likely to be a phased programme.
Can you give me an assurance that it will not cause extra cost burdens for the industry?
The mere transfer of budgets from the UK Government to the Scottish Government does not of itself produce that effect.
I know. Are you saying that sufficient budgets will be transferred to meet the surveillance requirements?
Surveillance is only part of it. As you probably know, DEFRA has been reducing the share of cost that is borne by the taxpayer as its budgets are being cut and pushing some cuts over. To the extent that that is completed before the budget transfers, we will not get the budget, because the transfer of costs to the industry will have taken place. We will not be able to recover that position quickly. We are in changing times in relation to the view about which costs that attach to food production should be borne by the taxpayer and which should not. DEFRA has been driving an agenda on that, which we have not been driving in Scotland.
Therefore, as DEFRA depletes its budgets for this task, the cost burden might have to be picked up in Scotland, either by the Government or by the industry in the future, given that the DEFRA budgets are now reduced and are reducing.
Yes. We have had some impact from that already in one or two areas. There is potential for more of that.
Is that a situation that fills you with dismay—or otherwise? There will potentially be a huge cost burden on the Scottish industry that it has not had to bear hitherto.
It is another challenge to be managed. That is for sure.
Almost an hour ago, Mr Gray said that the major reason for the decrease in the RAE budget is the transfer of moneys from the zero waste fund to local authorities, with £25.3 million being transferred this year and £26.3 million in 2010-11. The zero waste strategy is still out for consultation. How was the transfer of those global sums to local authority budgets calculated?
Since we moved the main part of the money for waste over to the local government budget in SR 2007, a remaining element has been available for us to fund initiatives from the zero waste fund. Part of that has been made available to local authorities to push forward on zero waste objectives. We have had lengthy discussions with the Convention of Scottish Local Authorities, which have led to an agreement on the figures that are held in the budget. The distribution for this year has been on the basis of the normal waste collection and disposal formula that is part of the grant-aided expenditure settlement. We are still in discussions with COSLA about the distribution formula for next year, because the Government and COSLA want to reflect on the draft waste plan and to consider whether alterations are needed to reflect what is required in it. The money that is shown in the budget will go to local authorities, but we will decide on the allocation formula in discussion and agreement with COSLA.
That worries me slightly. In the past, the committee has expressed concerns that some local authorities are further down the road towards zero waste than others, because of decisions that have been taken locally. Traditionally, local authorities' waste-disposal policies have been driven by landfill tax rather than the hierarchy in the zero waste strategy that is being consulted on. Some authorities are catching up, because they have been minimising landfill rather than making progress on zero waste. In the distribution of the money, is any consideration given to helping the underperforming local authorities to catch up with the zero waste strategy? It is maybe unfair to ask that question of you rather than local government.
There are two elements to the discussion with COSLA. At the highest level, there is a discussion about the whole GAE settlement and how it will proceed in the next spending review. That will involve consideration of various elements that have previously been transferred to the budget, such as funding for waste and flooding. On waste, the suggestion of using the existing GAE formula came from COSLA, with the agreement of the local authorities, and we accepted that for this year. We will discuss with COSLA its preferred approach for next year. It is still working that out but, once it is in a position to discuss the issue with us, we will agree how the money will be allocated. It is for the local authorities and COSLA to put a proposition to us.
Scotland has international waste commitments that it must meet. Who carries the can if they are not met?
The can starts to be carried at the UK level, because the allocation is to the UK, and Scotland has an allocation within that. We have already met our 2010 European directive requirements and we are now looking on to the next key date, which is 2013. We will want to ensure that progress is being made towards achieving the target. As you probably know, until the end of the present session of Parliament, we have suspended the scheme of fining local authorities, because we want to make progress in partnership with local authorities and COSLA, ensuring that each local authority makes its fair contribution to meeting the Scottish target, which will enable Scotland to make its fair contribution to meeting the UK target.
Before I ask about water quality, I think that Peter Peacock wishes to ask a supplementary.
If I may, convener.
I can confirm that the figure in question is £126 million over three years, which was allocated to the local government budget. That remains unaffected so, in effect, there is around £42 million for next year. Flood schemes are one of the matters that are being looked at in respect of the broader settlement with local government that will need to come in the next spending review. A joint working group of COSLA and ourselves has been looking at the issue and is due to report to COSLA and the Scottish Government shortly on its proposals.
The report that you referred to from the working group will help to inform future spending reviews rather than anything in the current timeframe.
Absolutely.
We are running out of time.
I know. I will move on to water quality and, in particular, the private water supply grant, the budget for which falls from £8.2 million to £5 million. I noticed that when the budget came out, which perhaps indicates that I should get out more. I asked a written question on what the demand was for the scheme, because the suggestion in the budget documents is that the reduction reflects demand. From the answer to my written question, I know that local government reclaims the money from the Scottish Government under section 47 of the Local Government in Scotland Act 2003. The figures for section 47 reimbursement claims were £360,000 in 2006-07, £872,000 in 2007-08 and £1.963 million in 2008-9. It looks as if there is still a significant underspend. Is that right?
That is correct. That is why we reviewed the scheme last year and made changes to the criteria and its availability. We also put a lot of effort into going out to the local authorities that have most of the private water supply issues, and the drinking water quality regulator held seminars for local authority staff to help them to publicise the scheme. We are hopeful that, as a result of that, there will be another increase in uptake. As the figures indicate, the sum has been going up each year. There will be an increase, but we have reduced the budget to reflect our current projections for next year.
Is demand likely to be £5 million? Obviously, one of the things that the committee will look for is whether there is underspend in budget lines that could be better used elsewhere. Are you able to give us an assurance that the £5 million that is allocated will reflect demand?
That is always very difficult to predict, because it depends on people making applications to local authorities and local authorities coming to us, once the whole process has taken place, to reclaim the money. We have asked all the local authorities for their best estimates, and the budget reflects what we think will be required. We will not know whether it is fully spent until late in the year.
The budget for the Forestry Commission rises by £2.5 million, of which £1.4 million is due to unspecified rising programme costs. I presume that they include such things as the woodlands in and around towns—WIAT—scheme. There is also a fall in the budget against policy, regulation and administration, but no explanation is offered in the text. Why is the policy, regulation and administration spend so much lower, and to what extent does that reflect efficiency savings, industry co-funding or other causes?
Policy, regulation and administration will go up a little bit next year and, again, that just reflects inflationary costs in wages and so on. There is no significant difference there.
Have you an answer to my first question about the programme costs?
The overall increase in spend goes back to the spending review when extra money was allocated to forestry for this year to reflect inflationary rises in salaries and across-the-board increases. There is no specific reason, really.
Are your planting targets being met this year? I realise that I am broadening out the questions although we do not have much time.
Not yet. We have taken steps to increase the level of incentive for woodland creation. Indications are that the sector is going to respond to those incentives, so we fully expect an increase in planting rates for next year, but it will be next year before those increases take effect and the extra programme comes through. The planting programme will therefore be below where we would like it to be this year, but we hope that it will get back on track next year.
Will that mean an underspend in your budget?
Yes. We will be underspent on woodland creation figures this year but, given that our spend on woodland grants is part of the overall SRDP pot, if we are underspent, it can be distributed elsewhere within the SRDP to meet pressures on other measures that might be oversubscribed.
Will you still meet your planting target commitment in terms of the Climate Change (Scotland) Bill?
We fully expect that, next year, we will be back on track with the levels of planting that we need to meet that commitment.
Last year, the committee was a bit concerned that the sale of land by the Forestry Commission was being counted as an efficiency saving rather than a normal capital receipt. If we go back to the efficiency delivery plans that were published in April, there are a number of other sales of assets: the Scottish Fisheries Protection Agency and SEPA each have £1.49 million of asset sales. They seem to be being considered as efficiency savings rather than being recycled into the budget. Is that correct?
We do not make up the corporate rules on that. If we can deliver the services using a lower asset base, that counts within the standard definition of an efficiency gain.
Because input is lower and output is the same.
In my area, we managed to move the Deer Commission in Inverness into the same building as Scottish Natural Heritage, which meant that one less asset was needed to deliver the same set of services. In that sense, it is quite legitimate to regard the building that the Deer Commission gave up as an efficiency gain.
But it will only occur in that year; it is not an efficiency that will continue or be replicated.
The capital amount of the sale is a one-off efficiency saving; that is quite true.
In the efficiency delivery plans from April, £40.2 million was set against voluntary modulation. Has that remained within the environment budget?
We are not talking about the release of a real sum of money. Rather, it is a question of saying that voluntary modulation resulted in a gain in the delivery of public goods. We do not think that we lost public good outputs in pillar 1, which is where the money came from, but it bought extra public goods in pillar 2, which is where it was put, so we are getting extra outputs for the same money.
That is therefore a time-releasing rather than a cash-releasing efficiency saving.
Yes. It did not release cash—it moved it from pillar 1 to pillar 2 and the public purse got extra benefits.
I may be wrong, but I thought that all the efficiency savings were now supposed to be cash releasing.
We are just reporting that within the standard rules that apply across the Scottish Government.
Liam McArthur has a final question.
It is on the provision that the budget makes for equality. I do not think that anyone would disagree with the statement on page 107 of the draft budget about the Government's determination to ensure that programmes such as the SRDP "fully reflect equality requirements." We would all sign up to that.
The evidence does not necessarily support that.
You need to come to one of my surgeries.
The take-up has been wide. The scheme has been hugely successful and has put a considerable amount of money into the rural economy. In fact, it has been more successful than any previous scheme.
It has certainly paid a lot of money out, but it has not necessarily paid it out to the same people to whom it might have paid it out had both written and online applications been acceptable.
I will duck that question because I am not responsible for relocation policy. If it would be helpful to the committee, I would be happy to provide it with information about what has been done. The rural affairs and environment portfolio probably has the most dispersed workforce of any portfolio.
I agree. The relocation of SNH to Inverness and the relocations to places such as Benbecula and Tiree were laudable and received support. I am less interested in a retrospective and more interested in where things go from here. Is the relocation process in abeyance or on hold?
As I said, I do not think that it would be appropriate for me to speak for the Government's relocation policy as a whole, but if the committee would find it helpful, I would be happy to provide it with an update on how the policy stands.
That would be helpful.
It might be helpful to say that co-location is part of the agenda of Scotland's environmental and rural services initiative. We are always looking for ways in which we can co-brigade people from the different agencies, when that will be helpful to the client. That process depends on opportunities such as leases coming up, but there is an aspiration that co-location will lead to better access for clients of the services that we provide.
But as co-location tends to happen where there are existing bodies, I would argue that it almost works against dispersal. I am not saying that dispersal is necessarily always the answer, but it is not true to say that co-location will always provide readier access to services or greater dispersal of agencies' functions across the country.
I think that that is a question for the minister rather than for the civil servants.
Meeting continued in private until 12:42.