Plenary, 08 Mar 2001

Meeting date: Thursday, March 8, 2001

Official Report 649KB pdf

---

Less Favoured Areas

We come to the members' business debate, on motion S1M-1452, in the name of Alex Fergusson, on less favoured areas.

Motion debated,

That the Parliament notes the concerns of farmers and crofters from all parts of Scotland regarding the Area Based Payments Scheme which will replace the Hill Livestock Compensatory Allowance Scheme; further notes that at least 65% of all recipients will be disadvantaged by this change to such a degree that many currently viable businesses will be rendered unviable, and believes that the Minister for Rural Development must review the situation as soon as is practical in order to redress the situation which will arise in 2003 when the transitional arrangements have their greatest financial impact.

I confess to a slight feeling of guilt at obtaining the debate during the foot-and-mouth crisis, which we discussed this morning. However, I feel that we must look to the future and to a time when we are not gripped by the current catastrophe. Therefore, the debate is relevant.

I declare an interest that is relevant to the debate, but I no longer engage in the business of farming and will not receive any agricultural subsidies in the foreseeable future. I come to the debate as a member who represents the south of Scotland. I accept that the deeply held concerns about the LFA support system know no geographic boundaries, but as other members will raise their local concerns, I will speak from an unashamedly southern perspective.

In early 1998, it became apparent that the European Commission was intent on reforming support for livestock production in LFAs by making payments on the basis of the area that was farmed, rather than on the number of livestock that was held on each holding. On the whole, that was a commendable desire that had the potential to bring alternative land uses, such as deer farming, within the supported agricultural framework. If the reform had been negotiated and handled properly, it would have produced a scheme that had the backing of the vast majority of Scotland's farmers. Instead, the minister has introduced a scheme that has fostered widespread and growing despair as its implications have been fully realised. When the scheme was announced, it raised only the somewhat choked response from the president of the National Farmers Union of Scotland that it was the best of a bad deal, which bought Scotland's farmers some time that had to be used to redress the imbalance that will exist from 2003.

I must ask what went wrong. What went wrong between the EU declaring its intention in 1998 and the STAR committee's hurried acceptance in October 2000 of a scheme that would allow the first payments to be made in 2001? What went so wrong that the Scottish Landowners Federation became so worried by the then Scottish Office's lack of any progress in 1999—a year after the intention was declared—that it felt compelled to conduct its own research in conjunction with the Macaulay Land Use Research Institute? They proposed a mechanism that would offer area-based support that would minimise the redistributional impact of the policy change. Sadly, that proposal received little more than lip service from the minister and his department as the consultation proceeded.

In a briefing paper that the NFUS issued on 14 February this year, it felt obliged to state that when the Scottish Office first consulted it in March 1999—a year after the intention was stated—it proposed three basic and understandable viewpoints.

First, there should be no large-scale geographic redistribution of moneys that were received under any new scheme. Secondly, the basis for compensation should continue to be natural physical handicaps. Lastly, new payments should permit producers to stay in business. The briefing paper concluded that those concerns are as valid now as they were nearly two years ago.

What went so wrong that the eventual scheme that was submitted by SERAD—as the department had by then happily become known—was summarily rejected by Europe? That resulted in the hasty and somewhat undignified scramble to negotiate the introduction of emergency legislation that allowed transitional arrangements for one year only.

What went so wrong that the scheme that was finally approved was dependent on land classification criteria that were some 50 years old, were felt by many to be over-simplistic and were originally intended for an entirely different purpose altogether?

Finally, what has gone so wrong that, despite the minister's assurances that his scheme will put £7.5 million more into the LFA budget over the first three years of the scheme, I have yet to find any person in the south of Scotland who will admit to being a winner under the scheme? Any extra funding that is claimed for the scheme appears to be disappearing into increased bureaucracy and administration costs—as ever.

The minister will point to the safety net arrangements as being particularly significant. Indeed, that mechanism has bought the little time to which I referred.

However the matter is examined, neither the minister nor I would take very kindly to the prospect of being told, "Your pay is about to be cut, but we will ensure that a significant portion of that pay will be cut by only 20 per cent this year, 30 per cent next year and 50 per cent the following year." Given the well-documented disastrous decline in farm income figures over the past few years, that is the ultimate slap in the face that will be impossible for some to bear.

The minister will also claim that he will use the time that he has bought to come up with an adjusted scheme. I trust that he can tell us today what time scale and changes are envisaged and how he will reverse the catastrophic transfer of funding away from the small and medium family- run farms that predominate in the south of Scotland.

Not for one second do I begrudge any extra penny that the Highlands and Islands or the north of Scotland can attract. However, when such extra money entails a significant financial penalty on the region that I have the honour to represent—a region that has a huge dependence on agriculture, which is one of the mainstays of its rural economy—I cannot, in all conscience, support it.

It is no secret that the EU will look at the area-based model for all future subsidy schemes. If the current model were adopted, the minister would be able to change his title yet again—though not, this time, his department's initials—from the Minister for Rural Development to the Minister for Rural Disintegration.

The Scottish Landowners Federation's recent submission to the Rural Development Committee states that, unless a modified scheme is found in the next 12 months, the SLF believes that livestock farming in much of rural Scotland will prove to be untenable. The National Farmers Union of Scotland and the Scottish Crofters Union have repeated those sentiments. They are sentiments—I really hope that they are not forecasts—with which I can only agree.

Is Alex Fergusson aware that the SCU anticipates the near death of the crofting system, which has been good at sustaining populations in remote places?

I bow to Dr Ewing's greater knowledge. I repeat that I am from the south of Scotland. I accept what she says, but I believe that there are crofters—and, indeed, other farmers—who will benefit greatly from the scheme. I will leave it to the minister to sum up Dr Ewing's valid point, which I thank her for making.

I hope that the minister will be able to answer my questions in his summing-up. If he cannot, I genuinely fear for the future of livestock farming as we know it in Scotland.

I will speak about the scheme as we understand it, that is, the area-based scheme of financial support for farmers and crofters in areas of rural Scotland that are considered to be geographically and agriculturally disadvantaged—more commonly known as the less favoured areas support scheme.

Members will be well aware of the extended and continuing difficulties that have been encountered by all sections of our agriculture and farming communities during the past decade. Any meaningful and appropriate financial support to those beleaguered enterprises should not be seen simply as compensation. It should be considered in a more enlightened way as a means of protecting, promoting and sustaining fragile livelihoods.

On the face of it, the new less favoured areas scheme does not seem to have the whole-hearted support of those whom it was designed to help. I have received strong representations from the National Farmers Union of Scotland and the Scottish Crofters Union—to say nothing of the various crofters and farmers who have contacted me—regarding the difficulties that they perceive in the scheme as it is presented. Much of their concern is about the change from headage-based to area-based payments, which appears to discriminate against smaller agricultural units. It is accepted that there is an increase in the total sum that is allocated to the scheme, but under the proposals the major part of that resource will in all probability be distributed to larger farms and landholders.

I appreciate that the new regulations are being imposed by our European colleagues and that we are bound to work within the framework of that legislation. However, I am pleased and encouraged by the fact that the Minister for Rural Development, Ross Finnie, has agreed to consider seriously modifications to the LFA scheme to ensure more appropriate support to the most disadvantaged rural areas and to ensure that the larger hill units are not overcompensated because of their vast acreage and unlimited stocking density.

I am pleased that the minister has established a working group of agriculture representatives, who will advise on the most appropriate and desirable modifications to the scheme, which I hope—when it is approved and implemented—will match the former hill livestock compensatory allowances and will, in the end, be to the satisfaction of all those who are concerned in our agricultural community.

I welcome the opportunity to contribute to the debate on less favoured areas and I congratulate Alex Fergusson on securing it. I have for some time been keen that there should be a debate on the issues that face crofters and small farmers—it is good that we are debating them today.

Crofting makes an important contribution to many remote areas of the Highlands and Islands. It provides not only jobs, but a focus for a community. Without crofting, many such remote areas would die. It is therefore essential that crofting is not put under threat, but is instead given all possible help to ensure its long-term future. The less favoured areas scheme that is proposed by the Executive must be seen in that light. Will the scheme help to ensure the long-term future of crofting or does it put crofting's future under threat? The only people who are truly qualified to give evidence on that are crofters. My understanding is that the scheme that is proposed by the Executive does not adequately take account of the impact of remoteness and the different climatic difficulties that are faced by crofters.

The recent history of LFAs seems to be long and tortuous. The minister has accepted that, in his words, there is an "inherent flaw" in the Executive's plans. That is what many in the crofting community, in the Parliament and in his own party have been saying to him for a long time. However, the question is, how did we get into this position? The Executive submitted proposals that Europe rejected as inadequate. There was then a short consultation period, and the current system was agreed. The effect of the current system is that many crofters and small farmers will lose out. The system does nothing to create a level playing field. Given the extra costs that are faced by crofters and farmers who live in remote and island communities, such a situation is patently unacceptable. What is the point of a less favoured areas scheme if it does not address the problems of less favoured areas, but instead favours large landowners in more favoured parts of Scotland?

What therefore needs to happen now? I welcome the comments that the minister made at a recent meeting with the Scottish Crofters Union in Portree. It is good that he is considering modifications, but I believe that he should go further and put in place a completely new system that has the agreement of crofters and small farmers in remote and island communities in Scotland, and which goes some way towards creating the level playing field that they need. I also urge the minister to continue constructive dialogue with crofters, because it is the crofters in the remote areas of the Highlands and especially in the islands who are losing out. I hope that the minister will address those points in winding up.

I congratulate Alex Fergusson warmly on securing this debate and on the measured way in which he, as usual, introduced the topic. I also congratulate Maureen Macmillan on her speech.

I find it difficult to understand how we can be in the situation that we now find ourselves in: we have a deal called the less favoured areas deal that actually gives more payment to more favoured areas. Those more favoured areas receive £45 or £39.40 per hectare, as opposed to £30.40. Alasdair Nicholson, a leading SNP member from the Western Isles who is in the public gallery this evening, wrote to The Herald on 2 December 2000, describing the reaction in the Western Isles to the deal. I believe that that reaction is shared throughout the crofting communities. He said:

"The sense of betrayal in the change from headage to acreage-based payments, which favour large farmers and landowners, as opposed to crofters, is compounded by the process and approach that the executive has taken on this issue, and the virtual silence from New Labour."

Well, I think that he was perhaps being a wee bit harsh on new Labour, because there was not total silence. Calum MacDonald MP broke that silence by saying in a letter to The Herald later that month:

"In Scotland, however, Mr Finnie has broken with that fundamental principle and has decided instead to give the highest rate of payments to better-off farmers rather than to the most disadvantaged."

I agree with Calum MacDonald, although I am bound to reflect that he has no vote in this Parliament. It seems very convenient for Westminster MPs to express their opposition to matters on which they have no vote. We see a new tendency emerging in Scottish politics and a new species of Labour MP—the rebel without a vote.

How have we reached the position that we are in today? It is quite simple; the crofters were not consulted. The Scottish Crofters Union was not consulted until some days after a meeting in October, and even then it did not hear the full plan. Back in August, however, Ross Finnie stated in a press release that

"This safety net is excellent news."

"Safety net" is a curious expression; the scheme involves the removal of 50 per cent of people's income. If I were to ask the staff of any factory or the staff of the Scottish Parliament whether they thought that we could accurately describe docking their pay in three years' time by 50 per cent as a safety net, I think that I know what they would say. I also think that I know what unions such as Unison and the Transport and General Workers Union would say if we proposed to cut people's income by 50 per cent in three years. They would say that that was out of order.

We find ourselves in an appalling position, and it is compounded by the fact that, rather than the Rural Development Committee being consulted specifically about how to sort the mess out, it has not been consulted about the detail of the statutory instrument. We must look forward and we must sort out the situation, and I know that the minister has expressed views to that effect. We must involve the Rural Development Committee in that process. If we do not, the problem will not be sorted out. We must also involve the SCU and other interested organisations; I know that there are steps afoot to do that.

The question is quite simple: do we want to have crofters and small hill farmers in Scotland or do we not? If we do, the deal must effectively be rewritten by every means possible. If we do not, the Executive should say so quite plainly. I await with interest what the minister has to say in response to the debate.

I, too, congratulate Alex Fergusson on introducing this long overdue debate to Parliament. This issue has been running for several months. The original decision on the changeover from headage to area-based payments was taken as part of the 2000 negotiations on the reform of the common agricultural policy. I do not think that anyone underestimated how difficult a process it would be to move from a headage system to an area-based system.

The scheme as it stands has real problems. We must recognise that there is time to address the concerns that have been raised. A 90 per cent safety net is in place for this year; it is 80 per cent for year 2. We must try to ensure that we get the outstanding problems resolved before the safety net drops to 80 per cent when we get to year 2.

I will explode one or two of the myths that have been expressed in Parliament tonight. First, the myth that this is a small farm versus big farm issue. The evidence from throughout my constituency is that it is not about small versus big—both big and small farms are affected.

The second myth that is being peddled is that the Northern Irish and English schemes are working well and there is no concern in those areas. Nothing could be further from the truth. I was in Northern Ireland a couple of weeks ago, where there is desperate concern about their scheme. When I was in Brussels last week, it was clear that the French, the Spanish and the Irish are all looking to modify their LFA schemes. Let us have none of this nonsense that everywhere else is perfect and the scheme is only not working here in Scotland.

Will George Lyon give way?

I have not got a lot of time; I want to finish the points that I am making.

The experience in my constituency is that the division between winners and losers seems to be about cattle production versus extensive sheep production. The cattle producers seem to be losing out, whether the farms are small such as crofts in Tyree or large such as many of the farms in Kintyre and Bute. Members should consider Orkney, which has some of the largest cattle farms in the country. They are all losers. It is not good enough to say that this is about small versus big farms; it is having an impact across the board. The consistent theme is that those with extensive sheep production on a large acreage are, by and large, beneficiaries. I accept that.

I welcome the minister's decision to set up a strategy group to examine how the scheme might be changed. The key issue is whether the Commission will accept changes. Commissioner Fischler, when he visited Parliament several months ago and spoke to many members, gave us the commitment that he would allow and accept changes that were proposed by member states or regional governments. That commitment must be honoured.

I hope that the strategy group, which will have the exact figures in front of it in the next week or two, when payments should be made, produces sensible proposals that address the concerns of farmers throughout Scotland. I hope, above all, that Commissioner Fischler delivers on his commitment to allow the changes to be made in the next two years, to ensure that there is a farming industry in the future.

I congratulate Alex Fergusson on introducing this motion. I declare an interest as a farmer and LFA livestock producer in the south of Scotland. As the chairman of the hill farming committee of the National Farmers Union of Scotland for six years, I have spent more time arguing the case for supporting LFA producers than was perhaps wise for my farming business.

Today, we are considering the new LFA scheme that comes into force this year, which needs only one word to describe it—that word is "disaster". With farm incomes at an all-time low, especially LFA farm income, the introduction of this scheme could not have come at a worse time.

We have heard talk of winners and losers. That is the crux of the problem. As Alex Fergusson said, the new scheme will apparently create more losers than winners. I do not know of anyone south of Stirling or east of Inverness and Pitlochry who will benefit from this scheme, yet those are the main food producing areas of Scotland.

The scheme will transfer precious funding away from farms that are economically hanging on by their fingertips to the even more disadvantaged farms in the north and west. I am not saying that the north and west should not be supported and funded. On the contrary, those areas, along with all the Scottish islands and the crofting communities, should receive extra special consideration and support. What I am saying is that this new scheme is not the way to do it.

Key to the whole question is how SERAD defines permanent grassland and rough grazing. If SERAD generously interprets the term "permanent grassland", the damage to farm incomes will not be so great in some cases. If SERAD classifies as rough grazing land that many farmers believe to be permanent grassland, many more farms will become totally unviable—which is a polite way of saying that they will go bankrupt. Furthermore, the classification in the south of Scotland that differentiates between moorland farmland and southern upland might also lead to further losses in income for many.

Simply put, the level of environmental support for moorland farms in the south of Scotland, and I suspect throughout the whole of Scotland, will not make up for the loss of headage payments under the old hill livestock compensation allowance scheme. This deal appears to satisfy no one, neither crofters nor most farmers in the north and south of Scotland.

I know that, in his summing-up, the minister will say that he had no choice but to accept this scheme and that his hand was forced by Brussels. However, it will not put him out of business; instead, as the scheme stands, it will put many of Scotland's hill farmers out of business in three years' time. In all probability, Ross Finnie will not be around to bear the consequences; however, those of us who have farmed for generations will be, and if the situation is the same, we will condemn the minister's legacy.

First of all, I congratulate Alex Fergusson on securing this important debate on a significant subject that very frequently crops up in my and my colleague Ian Jenkins's constituency mailbags.

The minister knows that the problem in the south of Scotland and particularly in the Scottish Borders is the fact that although much of our moorland has been classified in the scheme in the Scottish moorland category, we are able to have a higher stocking rate than before on that moorland. That means that the proposed scheme hits us in two ways. I know farmers who are talking about five-figure losses from their annual payment. Clearly, there were always going to be some losers in the scheme; some adjustments would always have to be made. However, the scale of the losses has taken some people by surprise, which is perhaps because of the current balance of the scheme.

I applaud the minister's initiative in ensuring that all the speculation over estimates from his department's model and from the NFU has been set aside and that we can now examine the actual farm figures. I ask him to share that information as widely as possible to ensure that there are constructive proposals for amendments that make the scheme work better. The safety net that the minister negotiated also provides an opportunity—not only in the first year of the scheme, but in its second year—for farmers to take advantage of the 80 per cent safety net.

I endorse George Lyon's comments about the English and Northern Irish schemes. It is not acceptable for us to look over the border and say, "Oh, it's much better there"—it is not. There have been considerable complaints about the schemes in those countries.

Does the member accept that neither my motion nor any of the speeches in the chamber have said that the other schemes are better or different? Indeed, they have not even been referred to. It has been accepted all round that Scotland has a special part to play in LFA support, because so much of the country has been seriously disadvantaged by the scheme.

I did not intend to imply that the member had suggested a view that Northern Ireland and England had better schemes. I am saying that, as George Lyon mentioned, that is a view that some hold, although it is not an appropriate view.

There are opportunities to develop other schemes, such as the rural stewardship scheme, but not all farms will qualify for that scheme. The important task ahead of us in the next few months is to ensure that the LFA scheme is adjusted. I know that the minister is earnest in his intention to do that, and I welcome any progress that he can make on it. However, I ask him to invite as wide an audience as possible in obtaining suggestions for improvements, so that we can develop a scheme using the safety nets, and ensure that the right scheme is in place when the safety nets run out.

I, too, congratulate Alex Fergusson on securing the debate. It is appropriate that it takes place today. If ever there was a suggestion that the needs of rural Scotland are not being addressed by the Parliament, today has set the record straight. The day has been dominated by rural issues, and this debate is an entirely appropriate way in which to finish it.

We must try to understand the scale of the loss that we are talking about. The motion refers to the fact that 65 per cent of recipients of the payments scheme will take a substantial cut. In parliamentary questions, I have attempted to tease out of the minister what the figures will be by area. According to one answer, 80 per cent of recipients in Kintyre will take a substantial hit. It would be useful if the overall figure could be broken down into figures for the different areas of the country.

I asked the rural affairs department for such information, but the answer was that such figures are not available. That raises the question how it was known that the figure for Kintyre is 80 per cent—the figures could not be given for anywhere else. I strongly suspect that the figures exist and I urge the minister to publish them as soon as possible.

The safety net is to be welcomed, as it will alleviate some of the worst excesses of the system in the immediate future. However, it does not mask the inherent flaw in the system. That case was not made just by the Crofters Union, but by the minister when he was questioned on 7 December. He said that the LFA scheme had

"the inherent flaw that intensive livestock operations that are prevalent in many of Scotland's remote and rural areas will be disadvantaged."—[Official Report, 7 December 2000; Vol 9, c 772.]

The minister is clear about the problems that the new scheme will cause, and nothing that we have heard today gets around the problem of what will happen in 2004. We can talk about a short-term scheme to alleviate the problem, but that does nothing to improve the structural and inherent weakness of the scheme.

It has been suggested that the money that will be put in over the next three years—in the region of £5 million, to which the minister may refer—will help. I dare say that that argument can be sustained, but I would like to raise a couple of questions. There is no suggestion that it is new money: it will have to be found from within the existing budget. That raises the question where the money will be found. If the minister has to make cuts in other areas, he should quite quickly tell us when that will happen.

On whether the scheme is over-compensating, Mr Lyon is correct: nobody is suggesting that the schemes in other countries are without their problems. What we are suggesting is that there are examples of schemes in which a ceiling is put on the money or in which banding is carried out according to scale, which enables moneys to be freed up and allows greater flexibility. I urge the minister to emphasise—when he addresses the matter through strategy groups or whatever—that we need to have the maximum flexibility, to allow us to alleviate the fundamental problems in the system.

Today is not just about recognising the problem; it is about doing something about it. That may mean the renegotiation that Fergus Ewing was talking about or urgent action to alleviate the problem. However, the option of doing nothing is not one that the Parliament should consider.

In his opening speech, Alex Fergusson asked how this happened and what happened. It is worth reminding ourselves that when we submitted our first scheme, it was radically different. It had six gradations, which were intended to take account of the fact that there is an enormously diverse range of agricultural holdings across the less favoured areas in Scotland. We have some substantial agricultural holdings; we have some very small agricultural holdings. We have some that are engaged in intensive farming and others that are engaged in extensive farming. We were trying to wrap up the whole tapestry of Scottish agricultural holdings.

The European Union did not regard the six gradations as inadequate; it thought that by trying to specify how we would deal with each area, we were trying to preserve the status quo. I do not think that that view was accurate or defensible, but it was the view that was taken.

The first problem relates to the perception, expressed by some members today, that we have moved funds from less favoured areas to more favoured areas. I do not want to get into a semantic debate, but in the terms of chapter 5 of the rural development regulation, 83 per cent of Scotland's agricultural holdings are deemed to be within a less favoured area. That poses a problem in itself. Some may wish to argue—and do so cogently—that there are parts of remote rural areas that one would deem to be worse than parts of other areas, but it is not correct to say that we can simply cut off 20 per cent of those who are within the less favoured area; the scheme has to cover all those who qualify within the less favoured area. That is a great problem, given the diverse nature of the areas involved.

We had to produce this scheme on the basis of the information that we had. I have to say two things, one of which is that George Lyon is right when he says that Franz Fischler has indicated that he will look favourably on what he called mid-term reviews. I have to say that I am not encouraged by the response that we have had from the European Commission about the extent to which we will be able to revise the scheme.

There is a strange anomaly. John Scott argued that we should be protecting the areas near him and not pushing too much support to areas that should be supported in a different way. He is also saying, however, that he can find no losers south of a line that was slightly north of the line that was suggested by Alex Fergusson. And, of course, the SNP has told us that all are losers elsewhere. Since we are spending the largest amount ever on less favoured area support, as opposed to the hill livestock compensation allowance, we have to ask where the money has gone. The element of stocking density was intended to ensure that we do not overpay those with vast moorland areas on which there are no livestock.

The point that I was trying to make is that there are no winners in the areas south and east of the areas I spoke of. Because of the holding sizes involved, any winners must be in the north and west. However, there are many small crofting units and islands in that area that will certainly not be winners. I was arguing that there should be a separate scheme for those disadvantaged areas. They are dear to my heart as well.

I think that that was the point that was being advanced.

We have to understand that the purpose of the European change was to promote greater use of extensive farming. That is fundamental to the European directive and it is why we should not be surprised, in moving from a headage system to an area-based system, that those who farm livestock intensively will probably be the losers. As George Lyon said, those who have benefited from the scheme will be found in the more extensive sheep farms.

What are we trying to do? We used the information that we had in good faith. We used the maps that we had and were reasonably convinced that by applying a little more money to this important scheme and by modelling it in such a way that we could ensure that proportionally more money went into the more remote areas such as the north and the west, those areas would, in aggregate, receive more of that money. I do not want to speculate on what has happened.

I say to Duncan Hamilton that our calculations were done using model figures. With regard to his point about whether more than 65 per cent of those concerned will receive less money, two distinctions must be made. One distinction is to do with the varying amounts of money in different years, which might be £60 million in one year and £63 million in another year.

The other distinction relates to the fourth year of the scheme. Under the regulation, we had to publish details of the funding for four years—that is a requirement. All I have agreed with other agriculture ministers is the actual funding for the next three years, which is now in black and white. We at the Scottish Executive have added new money. The money has come from our budget, and we have augmented the budget. That is why the figures for the next three years are £63.4 million, £58.9 million and £56.3 million.

I have not agreed the figure for the fourth year. I hope to be able to negotiate with agriculture ministers at a later stage on what that figure might be. The provisional allocation is fixed at £50.7 million and it will be for the Parliament to advocate that the level of structural support in this important scheme should be higher than that. Self-evidently, if we move from £63.4 million to £50.7 million over a four-year scheme, we will not have any winners if that is tailored on purely financial terms.

Can the minister say whether, in the proposals that have been put to the Commission, a capping mechanism was included, whereby the winners would have their gain capped? If not, why not? Will he now include such a mechanism in his amended approach to the negotiations?

I shall come on to that point. Because of the diversity, however, I do not really want to get into the detail. We considered some of the capping mechanisms employed in the English and Welsh schemes. We found that such mechanisms do not help because we have larger individual units compared with the United Kingdom average and with any other part of the UK. We run into a problem if we apply some of those caps. We had earnestly believed that through application of minimum levels of stocking density we could get away from people using the mechanisms as a means of making great profit.

We should be careful about the rate. If we consider the rate, we have to consider the farm unit. If we think about it, if a farmer is on a moorland rate and has and needs more land to sustain a given level of output, it is self-evident that a unit in better land will need less land—it will be smaller. Someone with the worse unit and the highest rate would end up massively overcompensating, given that it takes more land to sustain livestock in poorer areas. I think that that is one of the points that John Scott was driving at.

We are examining the returns as they come in and are trying to refine our model to ensure that it is drawn up on an actual, not a speculative, basis. We are trying to consider the areas where there appear genuinely—based not on speculation, but on fact—to be areas of inequity that ought properly to be addressed. Stocking density is clearly an issue that we must consider if it has not had the intended impact of preventing great winners arising among people who are based on vast tracts of moorland.

There is also the matter of the comparative level of holdings for sheep and beef in the areas concerned: some anomalies seem to have arisen in that regard. We will consider that. We have set up a group that includes the Scottish Crofters Union, the Scottish Landowners Federation and the National Farmers Union of Scotland. We will try to do what we can in a pragmatic sense. I cannot raise hopes and expectations. I am genuinely concerned. I would gain nothing from doing anything that would harm a particular area, such as crofting. That would not be my intention, nor was it the intention of the policy that we have introduced.

It is clear that the scheme does not suit Scottish agriculture. Given its parameters, it is very difficult to get a good fit. We will consider the matter on the basis of the facts, and that is how we will report back to the Parliament. I regret that progress will inevitably be delayed by the fact that all my staff are engaged in some way or another in dealing with the foot-and-mouth disease crisis.