Environmentally Sensitive Areas
We come now to the members' business debate on motion S1M-632, in the name of Tavish Scott, on the environmentally sensitive areas scheme.
I hope that members will be sensitive to the fact that a debate must still take place, and will leave quietly and quickly if they do not want to take part in it. The debate will be concluded after 30 minutes without any question being put. I invite members who want to take part in the debate to press their request-to-speak buttons as soon as possible so that we know who would like to speak.
Motion debated,
That the Parliament notes that crofters and farmers in Shetland have heavily subscribed to the Environmentally Sensitive Areas scheme; notes that those producers who entered the scheme before July 1998 were subject to a different set of scheme regulations in relation to stock disposal than those who entered after that date; further notes that the Scottish Executive have already stated that they are not minded to recover double payments under agri-environmental measures, and therefore believes that crofters and farmers should not suffer financial disadvantage through no fault of their own. R
I hope that my console will work properly while I deliver my speech.
I begin by registering an interest. I have an environmentally sensitive area plan on my own farm at home. I also admit to a sense of guilt today. While everyone else is working hard at the lambing, I am here pontificating about a matter that is important to a number of crofters and farmers in Shetland but not, happily, to my own unit, where, as the minister will be pleased to hear, the ESA is working extremely well.
Shetland's environmentally sensitive area is a success story. The current extension caused by the delay in introducing the countryside stewardship scheme creates a further welcome window of opportunity for new crofters and farmers to enter the existing ESA scheme. Some 700 producers are now part of that scheme in Shetland. Out of 1,100 agricultural units, that represents a notable step forward in recognising the importance of the principle that underlies ESAs. The scheme covers a large percentage of the Shetland flock and a large acreage of agricultural land in the islands.
I wish to discuss a small factor of the ESA scheme in the chamber this afternoon—I have initiated this debate to raise the change of rules by the Scottish Executive rural affairs department regarding the use of sheep quota by producers in Shetland under the ESA scheme.
The original advice to producers, based on the department's rules when the scheme began, was that all parties understood that quota freed by the stock disposal element of the ESA scheme could be used to cover other eligible sheep on a croft or farm. Rules expressly stating that were given to producers who signed up after 22 July 1994. Indeed, the letter from the then Scottish Office agriculture, environment and fisheries department in November 1994 quite clearly states:
"If you have signed and lodged an application form for an Environmentally Sensitive Areas Scheme . . . before 22 JULY 1994 you may lease out quota throughout the lifetime of your scheme."
In the past year, because of reinterpretation of those rules, which Ross Finnie has explained in answer to questions from Alex Fergusson and in letters to members of all parties, the rules have been amended. Producers are now not entitled to lease out quota or claim sheep annual premium on other female sheep on the croft or farm. I am glad that the mistake has at least been recognised; that is progress. Crofting colleagues of mine who are many years older than I am have suggested that it is the first time that the department has admitted getting something wrong. That is welcome and the minister is to be congratulated on making that progress. The agriculture community recognises that.
One of my constituents, a crofter who is affected by the change of circumstances, has asked me to suggest to the minister the introduction of a new scheme. He said in a recent letter to me:
"If the agreed payments cannot be made under the ESA scheme, then surely—with a little bit of imaginative thinking—a way can and must be found to compensate crofters and farmers for their loss, even if no EU funding is available for such compensation".
He went on to suggest that it could be called the official error compensation scheme. I do not know whether the minister would be prepared to take up that helpful suggestion from one of my constituents.
Alex Fergusson has cases of this difficulty in his region; if I understand it correctly, the cases are broadly to be found in the northern isles and in south-west Scotland. In Shetland, 29 producers are affected; on the telephone last night I spoke to one who will lose approximately 90 units at £35—about £3,150.
From correspondence with the minister on this matter, I understand that the industry will lose about £41,000 because of mistakes that it has to be stressed are in no way the responsibility of the crofters or farmers who have been affected. That, in a nutshell, is why those who are affected feel especially aggrieved. I would like the minister to recognise that, as the mistake is that of the department, a mechanism should be found to ensure that producers are not financially disadvantaged.
The minister will be aware of the impending case, backed by legal opinion, being sought by the National Farmers Union on behalf of one of its members. I would like to raise the actions that have been taken, because it is important to consider them. The time scale that the rural affairs department has operated under has not always helped producers to make informed decisions in pursuing this matter.
The minister rightly asks for the industry to behave in a thoroughly modern, businesslike fashion. To do that, we must have consistency in the application of the department's rules and schemes. It is difficult to do that when advice has conflicted, when time scales demanded for answers to potentially difficult questions are short and when information asked for by crofters to allow those informed decisions to take place—based, for example, on advice by the Scottish Agricultural College, the Farming and Wildlife Advisory Group or other organisations who give advice in this area—takes months to arrive.
Difficulties have been created by the way in which this has been handled. To illustrate the time scale, the first information letter to producers saying that there was a problem arrived on 2 July last year. It intimated that—hopefully—within eight weeks, there would be further advice to producers. Nothing happened until 25 January this year, when a letter was sent to affected producers, setting out the position. I remind members—those who are aware of the circumstances will know this—that that was only a matter of days before the Friday 4 February cut-off for the application for sheep annual premium and hill livestock compensatory allowances.
The time scale given to crofters and farmers who were affected was especially short and, in some cases, very difficult. Someone said to me on the telephone last night that they received the letter on the Tuesday, but had to have their SAP and HLCA claim in on the Friday. That is demanding in anyone's estimation; in the days available, they had to make a best estimate of what they would do with their ESA.
There were problems with trading, leasing in or purchasing quota to cover eligible female sheep. For Shetland, that is complicated by the fact that the nearest available place in which to trade quota is Aberdeen Northern Marts, at Thainstone. To do that, one has to exchange letters; there are practical issues there that are not easy to conclude.
The ESA is a good use of agri-environment moneys; I would like it to continue. The competitive structure being considered for future agri-environment support is not necessarily the best way forward because, as many farming and crofting organisations have pointed out, it is difficult to compare a croft in Walls in the west of Shetland with a larger farm in south-west Scotland. There are concerns about that. I suggest to the minister that, in the areas in which they have been available, ESAs have been a good, useful mechanism for providing agri-environment support for crofting and farming.
The manner in which some producers are being treated is causing disquiet. Potential applicants—there are quite a number in Shetland at the moment, simply because the window has been extended—do not know what to expect. I hope that, in his summing up, the minister will give an assurance that there will be no more rule changes that will disadvantage people. That point was made when I met some union representatives and the SAC the other day, before I came south; I was asked to pursue the matter today.
I press the minister for a review of the 29 outstanding cases in Shetland. I would like him to ensure that not one of those crofters or farmers is financially disadvantaged because of the treatment of their case.
I welcome his announcement that the department will consider claims from producers for losses caused as a consequence of the scheme guidance issued by the department. That is an admission of the mistake and an attempt to set a solution in progress. That is welcome, but the department is still judge and jury and, given the circumstances and the history, some producers will obviously have a concern about that. I hope that that concern can be allayed.
I understand the constraints and difficulties with regard to state aid rules, but I urge the minister to find a mechanism to help producers who, through no fault of their own, are in financial loss.
In declaring an interest, may I say that even when I was a working farmer, I did not participate in any of the schemes that I may mention during my speech this evening.
First, I congratulate Tavish Scott on securing the debate, which will allow us to highlight some of the issues that are of grave concern to farmers and crofters not just in Shetland, but throughout the country, who are faced by some of the toughest times—in economic terms—that they have ever experienced. Frankly, it is shameful that only three of the five—sorry, six—political parties that are represented in the Parliament are here tonight. Robin Harper will be pleased that I included him.
I am like most rural MSPs, I am sure, in that issues relating to the double payments anomaly started hitting my desk last autumn. Rarely at that time did any agricultural meeting go by without someone speaking to me of their difficulties with their participation in one scheme or another. I accept fully that the double payments issue, relating to the regulations on stock disposal, was the result of a misinterpretation of those regulations by the Scottish Office agriculture department, as it was then.
I also accept that the minister, by intimating that he does not intend to seek repayment of such double payments, has shown understanding of the situation, in that no double payments were the result of false or fraudulent claims and all claimants who were caught in the double claims trap were under the impression—given officially in writing in some cases—that they were perfectly entitled to use quota that was freed up by the reduction in stock numbers to claim subsidy for other stock that was previously not covered by quota. Indeed, that fact alone may well have made the difference for some entrants between applying and not applying for a scheme.
Members can imagine the upset that SERAD—as the department had become—caused when it sent out notification that such claims could not be allowed. Sometimes, as Tavish Scott said, it is gratifying to discover that officialdom can make mistakes and admit to it and, to a degree, one can accept that if it is handled properly. However, I must make strong representations that this business has not been handled well and has increased greatly the frustration and hardship of some of the farmers and crofters involved.
A farmer who wrote to me and on whose behalf I had considerable correspondence with the minister—he will know who the farmer is—and with SERAD officials, who were extremely helpful, had success, ultimately; I am delighted to report that. However, that farmer received his first notification that there was a problem with his claim under the countryside premium scheme on 22 June 1999.
In that letter, the SERAD official stated that he would endeavour to get back to the farmer within eight weeks of the date of the letter—14 June—to explain matters further. The reply from SERAD arrived, eventually, on 24 January 2000. Can it be right that it took seven months—never mind eight weeks—for the farmer to receive that reply, despite his sending a recorded delivery letter to the minister on 23 December, to which he has yet to receive a reply? That is not right, and is symptomatic of something very wrong in the relationship between SERAD and its agricultural clients—a relationship that appears to be deteriorating as time goes by.
I will quote from a letter from another farmer, from south-west Scotland, who wrote to me as a member of the Rural Affairs Committee. He said:
"May I recommend that your committee enquire into SERAD's relationship with its clients. I would sum it up politely as an attitude problem."
Perhaps I was fortunate that I farmed in an era when my relationship with the department—as we always called it—was one of mutual respect and helpfulness, within reasonable parameters. Sadly, those days appear to have gone and it will be much to the detriment of SERAD officials and the individual farmer if respect and helpfulness are replaced by suspicion and obstruction. That would appear to be almost inevitable when one looks at the farce of the agricultural business improvement scheme, the shambles of some of the agri-environment schemes and the current non-availability of the farm woodland premium scheme.
The only conclusion that I can come to is that SERAD is in a mess procedurally and that that is affecting its performance and that of those whom it exists to serve—its clients. I make no accusations against individuals, who have been helpfulness personified in trying to assist the people who have written to me, but I urge Ross Finnie to look into the concerns that have been expressed, to find out what is wrong and to take measures to put things right. That would be to everybody's benefit, not least the minister's. I support the motion.
I rise not as a farmer but as a constituency MSP who has been approached by farmers in Ettrick and Yarrow in particular.
People have a real sense of injustice when rules are changed and goalposts are shifted, especially over a short period. When that happens, there is not much that people can do about it and their carefully laid plans run into difficulties. That is particularly true at this time, when the whole rural economy is extremely fragile. As we know, the margins sheep farmers are working on are critical. This seems to be another blow when people are at their most vulnerable.
Tavish Scott and Alex Fergusson have gone into the details of this issue in a way that I cannot match. Where farmers are concentrated in a small area, as in the Borders valleys, developments of this kind are critical to the whole rural economy. I am grateful to the minister for acknowledging errors that have been made in the past. His willingness not to exact double payments is vital. I ask him to do whatever he can to ensure that this kind of thing does not happen again, that there is better consultation between the farmers and the authorities and that there is warning of such developments.
I welcome the opportunity to respond to Tavish Scott on this issue, which has caused a considerable amount of angst—although, as Alex Fergusson noted, many of those who have claimed on other occasions to be most concerned about it do not appear to be displaying that angst here, which seems rather odd.
I want to emphasise two things. First, I hope that I have made it clear that I regret very much the position that some of our producers find themselves in, through no fault of their own. Secondly, this is now a legal issue—which I regret—and not just a matter of funding. I recognise that many members, including Tavish Scott, Alex Fergusson and Ian Jenkins, have raised this issue and that it is a topic of concern. I want to make it clear that the Executive is alive to that and that we have no wish to disadvantage producers financially.
Tavish Scott claimed that there were difficulties in getting the forms in between 25 January and 4 February. He may be aware that the department has agreed to accept sheep annual premium claims that can be adjusted later without penalty. I hope that that is of help to him.
Alex Fergusson talked about the relationship between officials in SERAD and the farming community. He will be aware that the integrated administration and control system red tape review raised concerns that the relationship had broken down. I have indicated that I am anxious to rebuild it.
I am bound to say that I think it is extremely unfortunate that the European Union framework has turned people in my department into policemen, instead of officials who are genuinely interested in helping the farming community. I have indicated to officials—the vast majority of whom welcome this—that their role is to act on behalf of and in co-operation with farmers. I hope that we can quickly resume that kind of relationship.
Reference was made to a state of collapse, which is perhaps a slight hyperbole. The difficulty we are having with the European Union in agreeing the revised regulations, which is putting a stop to the farm woodland grant scheme, for example, is a matter of deep regret, but I am not able to accept that that difficulty is entirely the responsibility of my department.
Am I correct in saying that ESA payments have been capped in Scotland for a long time—I am not certain whether that still happens—while they were not capped in England? If that remains the situation, will the minister take action to rectify that situation?
It would be wrong of me to give an answer off the top of my head—it is dangerous for ministers to do that and I will not do so. I will respond to John Scott's question in detail when I have investigated the matter.
I am grateful.
As Tavish Scott said, the original interpretation of the scheme was that the regulation would put a prohibition on the use of quota rights as a result of stock disposal in an agri-environment scheme. The department's original interpretation of that requirement was that the bar, as Tavish said, was only to lease or sale of the quota rights and that freed quota rights could be used to claim SAP. We are all agreed on that point.
I regret to say that that interpretation, which was before my time, was erroneous: the prohibition on the use of quota rights extends not only to lease or sale but also to the use of those rights to claim SAP. In short, a proper interpretation of the rules shows clearly that one cannot receive agri-environment stock disposal payments and SAP payments utilising units of quota that ought to have been frozen. I think that we agree that fact, although it is to be regretted.
The stock disposal element has affected 121 producers in Scotland, 29 of whom are in Shetland, who have received double payments. The total value of those payments amounted to just under £400,000. I accepted in good faith from the outset that the producers acted in good faith. We have told them that the decision is not up to me—I am glad that that fact has been recognised. If it were left to me, I would not be seeking any recovery of the payments.
I greatly regret that the EU has decided that the situation might be one of state aid and therefore, unfortunately, I am in its hands. I repeat: I am not minded to seek any recovery from our producers.
On that point, can the minister give an idea of the time scale in which a decision might be reached?
I continue to press the point almost weekly. I hope that a decision will be made soon. While I cannot give a precise date, I have made it absolutely clear to the EU that this is nonsense, as the situation involves a small sum of money and it would be completely wrong for us to recover payments in the circumstances in which we find ourselves. That is as far as I am able to go today.
We have given producers the option of continuing with their agri-environment stock disposal option, which will require the requisite number of quota rights to be frozen, or of withdrawing without penalty. The vast majority of producers—95 per cent—who have responded have indicated a preference to remain within the agri-environment scheme. In Shetland, 100 per cent have chosen that option.
I recognise that the withholding of payments that were expected in 1999 has caused hardship in many areas. However, I regret to say that once the issue had been resolved and the legal position clarified, the rural affairs department would have been acting illegally if it had continued to make those payments. That option is not open to me, but I say to Tavish Scott that we are not aware of any other regulation that has been misinterpreted in this way, so I am not aware of any other scheme in which we would have to issue a similar revamped interpretation of a regulation's intentions.
On 17 February, I announced to the chamber that the Executive would consider claims for compensation from individual producers who could demonstrate that their business had suffered a loss through following the department's guidance. As Tavish Scott indicated, the NFU in Scotland has advised its members to seek the assistance of farm advisers in drawing up claims. Indeed, I believe that a claim is being prosecuted. I assure members that those claims will receive sympathetic and, I hope, swift consideration. If those claims are taken further, the matter may go outwith the hands of my department. We still recognise, however, that compensation may be payable. Where our inquiries have established that all, some or part of the expected 1999 stock disposal payments can be made, that is now being done.
A number of producers have suggested that they be allowed to repay their 1999 SAP payments and receive the agri environment stock disposal payment instead. I am sympathetic to that, and we are seeking to establish whether such an approach would be legal.
We will consider in the light of advice what the implications for the future operation of the SAP scheme might be. I regret not having that advice now, but I am hoping to receive the final advice within the next two to three weeks. It was a matter worth pursuing and I am extremely sympathetic to the point that has been raised in this debate.
This is a matter of real concern to the individual producers concerned and, as Alex Fergusson said, it could not have come at a worse time for those engaged in the sheep sector. Complex issues remain to be resolved, but I can only say that we have no wish to cause financial disadvantage to producers, which would be through no fault of their own. I will use my best endeavours to persuade the EU that it would not be appropriate to pursue recovery action.
We are committed to dealing promptly with compensation claims and I can assure the chamber that I will continue with the Executive's efforts to secure an outcome that is fair and equitable to all concerned, but within the legal parameters that we must all respect.
Meeting closed at 17:31.