Chamber and committees

That is always the issue when Governments have yearly budgets—you often cannot commit multiyear funding. However, you have my assurance that, in the budget negotiations, I will prioritise areas where I see funding that is doing great work and having outcomes above and beyond what we initially thought. I would say that CLLD funding is one of those pots of funding. I have seen many projects, even in my constituency, that are making a difference to vulnerable people. In my constituency alone, funding has gone into a circular economy social enterprise that gives employment and training to adults with learning disabilities. To namecheck it, it is called Wood Recyclability. That is just an example.

During the summer, I was in Tiree, where CLLD funding has been used for a leisure centre that also provides childcare and enables people to come together in the winter months. There is also a gym, which is the only one on the island. That helps with community cohesion, particularly in an area where there are dark winters and very little to bring people together, and there is social isolation. That is hitting quite a lot of objectives beyond anything to do with economic development. It is bringing social cohesion in many ways. I feel strongly that the CLLD fund is important.

I have one sentence to add. The whole farm plan will give individual farms an assessment of how they are contributing.

My reflection would be that the climate change plan sits at the top and is underpinned by a number of strategies across lots of portfolios and sectors. Obviously, the climate change plan draws on the wider agriculture reform programme and the rural support plan, which you have heard a lot about today, as well as other strategies such as the land use strategy. As they are combined, they provide a coherent structure in which we can see that we will have sustainable regenerative agriculture and deliver on the policy objectives in the climate change plan. We also have woodland creation and peatland restoration strategies as well as the biodiversity strategy. In effect, all those strategies underpin the climate change plan. Land use more generally—not just agriculture—has a huge part to play in a number of streams of work.

10:15

From memory, we made a couple of changes to the climate change plan as a result of some of the predecessor committee’s recommendations. We expanded some information on the support that is available for various workstreams, such as woodland creation and agroforestry. Wider land use diversification was one of the committee’s asks. We provided more detail on agricultural reform and we have been through quite a lot of that information today. Once again, we clarified our position on livestock policy and we added more detail about agriculture mitigation measures and the associated emissions reductions.

Mr Fairlie is right to say that the inflation that we have seen over the past few years in particular has had an effect on this portfolio and this sector, but it has also had an effect on budgets across the Government. Basically, capital in particular is generally worth less than it was before inflation started to rocket in the way that it has. I agree that there were some protections against inflation when we were a member of the European Union.

Despite that and the fact that we are in an extremely challenging situation, we are investing in this portfolio to the tune of £1.373 billion in 2026-27, and we are continuing to provide certainty of agriculture spend. As our farmers, crofters and land managers know—and as the First Minister, Mr Fairlie and I have reiterated—we are investing £666 million in 2026-27 to maintain direct payments to the sector.

We cannot control inflation, and there is nothing in our block grant that means that there has to be an inflationary uplift. If we do not get that, we have to work within the constraints of the money that we are given. We can raise revenue through our own taxes, although we are continually asked by some people in this Parliament to cut them, which would also have an impact on the amount of money that we could spend in all our portfolios.

We are giving certainty to farmers—certainty that farmers in the rest of the United Kingdom do not have—by committing to a budget over many years. Further, our spending review gives us the ability to consider the projections that we are making over that period.

It must be taken into account that any money that is put into this portfolio would have to come from other parts of the Government, following Cabinet discussions around the budget. It is increasingly unlikely that more money will come from the UK through the block grant. We know that the UK Government has made a decision to cut infrastructure investment in order to support defence spending—I think that that is what Andy Burnham has signalled. That could mean that our capital funding may be reduced by about £370 million. However, despite the projections about what the UK Government might do, we have committed to delivering direct payments to farmers, as well as all the other schemes that we have.

There has been inflation, but we try to maintain our spend as much as possible and give certainty to our land managers, crofters and farmers, so that they can plan. That is not the case in other parts of the UK.

We are actively doing that, and the peatland code is helpful in that regard. There are several reasons why people might want to invest in peat, and there are obviously carbon credits that are associated with that. However, we need people to work under the peatland code to ensure that such investment is done in a sustainable way.

Peatland restoration is a big area of investment. We kicked off a lot of discussions in the previous parliamentary session—those discussions are not just happening with the Scottish Government; they are happening in international forums as well—about how responsible private investment can be crowded into nature restoration more widely.

We are in the foothills of those discussions. Every country that has ambitions in this area is considering how it can use public money to leverage in responsible private finance to be able to deliver more. Scotland is quite far forward in some of its thinking on the issue. For example, I have the figure in front of me that Scotland accounts for 85 per cent of the UK’s peatland code projects—I thought that it was 80 per cent, but it is 85 per cent. However, there is more money out there, and philanthropy funds and pension funds are also looking to invest in peatland restoration.

We are actively working on the issue, and my director general net zero, Andy Kerr, is really exercised about it. He has a background in the area and is looking at where we could have the expertise within the Government to get better mechanisms. Another exciting thing—apart from the fact that we will be able to do more in Scotland—is that, once we get the mechanisms figured out, we will be able to share knowledge with the international community on how they work.

There is ambition in a lot of countries, and there is a lot of money out there that does not know where to go—we also mentioned that with regard to woodland. If we do not get a mechanism in place that people want to invest in, other countries will. We can share the learning if we get that right. There is huge potential in this area, and I am very excited about it.

There is already a lot of private investment in peatland and nature restoration. For example, Scottish and Southern Electricity Networks has pledged something like £100 million towards nature restoration. Those who spend a lot of money doing various things in Scotland that require land have a corporate social responsibility, and we very much need to hold them to account on that.

To jump to the topic of marine restoration, you can look at what we are doing with the marine recovery fund. That came out of an agreement between the Scottish and UK Governments that allowed us to look at some of the money that is flowing as a result of the environmental impacts that are associated with offshore wind, which has enabled us to have a strategic marine restoration fund. That is another example of where we can corral private capital that would have been spent quite piecemeal on projects into large-scale restoration projects.

I will tell you what I am not interested in doing: creating more reports, reviews and strategies. I am not interested in any of that. I am looking at mechanisms and unlocking.

I will give you an example to illustrate what I am talking about. I was just outside Ullapool, in Andrew Baxter’s constituency, and I was speaking to a community that had got public funding to create a small mixed-use development comprising eight houses. They had to pay developer contributions back to the council for the community, but they themselves were the community. Again, that is an example of a well-meaning regulation that is being applied in the wrong way. That does not really make sense. How is that creating community wealth? How is that allowing them to do more with the money?

There are lots of different things to think about in this area. Again, I am open to suggestions from MSPs, based on their experience of representing rural areas, and I am also open to suggestions on a postcard regarding the name of the bill.

I have found the numbers that I wanted to give in relation to the target. Peatland action has confirmed that, last year, 15,000 hectares of degraded peatland were restored—that exceeded our target of 12,000 hectares—and it would be lovely to think that we will build on that this year. I am sure that we will.

ARIOB and the workstreams associated with it continue, so I will pass over to Mr Fairlie.

I guess that we need to have a metric—in our climate change plan, there has to be a metric that we stick to.

However, I understand your point and have massive sympathy with it. There are some areas where peatland is really degraded, and that was one of the things that were identified through the land light detection and ranging—LiDAR—programme. We now have a picture, which we did not have three years ago, of where the most degraded areas are. Once we have that data, I can see people being fleet of foot in applying for money to restore that peatland.

There is an issue in how we report back in relation to our carbon budgets. The reporting and accounting for that is outwith our control; that has to be standardised. However, work is ongoing on how we can take account of particular interventions that have resulted in very badly degraded peatland being brought back into health, which will have a bigger impact on the associated carbon accounting.

At the moment, I am using hectares as the metric, but I have sympathy with your point. It is not straightforward, and we need to be agile in reflecting that.

Ever since I was given this portfolio, I have been trying to say the name of that bill. I would like to change the name, but I am calling it the RRB at the moment.

I looked at some of the policy suggestions that were associated with the bill, and I thought that it could potentially do more. I want to use the bill to remove barriers to economic growth, particularly for small businesses and businesses that want to diversify into different areas. I want to look at the barriers to housing creation in rural areas, particularly where communities are using public money to create housing.

During the summer, when I was out and about in Scotland speaking to community groups, I heard about a lot of things in the planning system that are stemming economic growth and that mean that, in rural and island areas, it takes far more time for things to get done and there are additional costs. I have been working with my officials on that.

The bill is not in the programme for government; instead, the work on the bill is in the programme for government. I want it to be an enabling bill that will take on board some of the frustrations that I hear about from those who work in the rural economy and live in rural areas. The bill will look at the regulatory landscape and the situation in which we have things that work in an urban environment but not in rural areas. We will also consider things that I can put into law that will be able to unlock economic growth. By economic growth, I also mean stemming rural depopulation.

I am not looking at the things that I want to do; I am looking at the problems and thinking about how we can unlock things that make those problems worse, or remove barriers that prevent us from addressing some of those problems. I know that that sounds a little woolly, but I am working back from the problems and looking at the levers that are available in the powers that the Government has. I am also looking at the existing regulatory landscape, which is well meaning but has had unintended consequences in rural areas. I am looking to address some of those issues in the rural renewal bill.

I want the bill to be an economic unlocker. One big driver of that unlocking is giving businesses flexibility to do different things. It is also about providing housing in communities that struggle to get people to come and work there for service provision of any description. I am interested in feedback from all my rural counterparts on that. I want to hear about the things that, as I am speaking, you are hoping that I am going to address. I want to have cross-party discussion on the issues.

I have already had a lot of discussion with stakeholders in the rural portfolio. More importantly, I have been going out and listening to folk who have tried to do things and have then decided not to. I have heard from folk who have tried to diversify their business and have said that, if certain things had been in place, or if we did not have certain things in place, they could have got something done an awful lot better and could have created more jobs in their business as a result.

I am not just in listening mode; I am in problem-solving mode. I will not introduce the rural renewal bill until I have done that work and am satisfied that there are key levers. I am probably looking at about the middle of this session of Parliament for that.