Meeting of the Parliament

Meeting date: Tuesday, September 3, 2019

Official Report 899KB pdf

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European Union Farming Funding (Convergence Funds)

The next item of business is a statement by Fergus Ewing on the repatriation of convergence funds that are owed to Scottish farming. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

16:33  

This Government, with the support of this Parliament, has been campaigning for many years for the repatriation of the European Union convergence funds that are owed to Scottish farming. We have been united in our endeavour to achieve that and I thank all members, across all parties, for their support and efforts.

There have been developments since the issue was previously discussed in the chamber, on which I want to update members.

First, I think that it would be helpful to set out the circumstances and history behind the issue. In 2013, the EU announced that a process of external convergence should occur between member states, as it considered that historic allocations of common agricultural policy support, which were based on production levels in the 1990s and early 2000s, were no longer meeting the objectives for farming and food production. Therefore, any member state whose average direct payment rate was less than 90 per cent of the EU average in 2013 would be awarded a convergence uplift, to take it at least to €196 per hectare by 2020.

England, Wales and Northern Ireland were each, on average, already above the 90 per cent of EU average convergence threshold in 2013. However, direct payments in Scotland were significantly lower on average, at €130 per hectare. Indeed, they were low enough to pull the overall United Kingdom rate below the convergence threshold.

As a result of Scotland’s low payment rate, the UK was awarded an uplift of €223 million of additional CAP funding to cover the 2014 to 2020 period. Despite the fact that the EU’s rationale for convergence funding was to narrow the payment gap across the EU, the UK Government chose to distribute the money across the UK Administrations based on the historic allocations formulae that were used for all other CAP money allocations. That meant that Scotland received only 16.3 per cent of the uplift, despite being the only part of the UK that was, on average, below the EU’s convergence threshold.

There is no doubt that that was neither equitable nor within the spirit of the EU’s aims for convergence. The Scottish Government tried to prevent it from happening, my predecessor, Richard Lochhead, corresponded furiously with his UK Government counterparts and the Scottish Parliament agreed unanimously to support the case for repatriation of the convergence funding, but all to little avail. The UK Government would not budge.

On being appointed Cabinet Secretary for the Rural Economy, I took up the cudgels and was determined not to lay them down again until every avenue had been explored and every effort made to win Scotland’s case. In October 2017, I brought the issue back to Parliament to secure on-going support from across the chamber. In addition, I engaged stakeholders, including NFU Scotland, the Scottish Tenant Farmers Association, Scottish Land & Estates, the Scottish Beef Association, the National Sheep Association in Scotland and the Scottish Crofting Federation, all of which agreed to work in partnership with us to press the case with the UK Government. They did so, and I thank them all for helping to keep the matter firmly at the forefront of UK ministers’ minds.

The UK Government might have imagined that the issue would fade away with the prospect of Brexit, but if anything, that only served to underscore the urgency of the matter and the necessity of resolving it. Therefore, I determined to raise it at every opportunity with the then Department for Environment, Food and Rural Affairs secretary, Michael Gove. Although I suspect that I might simply have worn him down, in fairness, I must convey my gratitude to him for finally agreeing, in late 2017, to conduct a review. We might not have got the terms of reference that we wanted—they were changed such that the focus of the review would be solely on future funding allocations; I understand that that change was made at the behest of the UK Treasury—but, under the chairmanship of Lord Bew, a review has been undertaken. First, I thank the Scottish Government officials for their input to making Scotland’s case robustly to the panel. Secondly, I thank Scotland’s representative on the Bew panel, Jim Walker, for his sterling efforts on behalf of Scottish farming and for all the time that he has devoted to the task. Jim has ensured that Scotland’s case and voice have been heard. He has applied himself to the task that was asked of him with customary gusto and tenacity—frankly, we could not have asked for more.

I understand that the review has reached its conclusions, and I look forward to those being published. I hope that the review panel has accepted Scotland’s case as being substantial and compelling. Support has come from perhaps surprising quarters in recent times. Many people might have been surprised that Boris Johnson, in his campaign to be elected to lead the Conservative Party, unequivocally promised to pay out additional funding to Scottish farming in 2020 and again in 2021. Although I do not intend to make a habit of it, I am happy on this singular occasion to say that I agree with the Prime Minister that we must

“make sure that Scotland’s farmers get the support that they are owed.”

Where I would disagree with him is on the idea that this “historic injustice”—to use the phrase that he deployed—came about as a result of the CAP. It was caused entirely by his predecessor Government.

What matters now is that Boris Johnson is willing to put matters right. Therefore, I welcome his further pledge, which was given to a Scottish National Party MP in the House of Commons, so to do. What concerns me is that subsequent exchanges with DEFRA, and exchanges that my colleague Derek Mackay has had with the Treasury, have not confirmed that the £160 million that Scotland is owed will be transferred.

My intention today is to encourage this Parliament to unite once again in calling on the Prime Minister to make good his promise and to do so swiftly. Further, I hope that I can secure support in affirming, as we did in a debate earlier this year, that agriculture is a devolved competence—it is a policy responsibility that we have been dealing with for two decades now—and that we send the very clear message to the Prime Minister, to DEFRA, to the Treasury and to anyone else in the UK Government who needs to hear it that if we receive the £160 million owed to Scottish farming, and indeed the future allocations as pledged, all the funding comes without strings. There can be no attempt to bind or determine how the funding is to be used or disseminated—that is this Parliament’s responsibility

I want to reassure members about this Government’s intentions should we receive what we have been promised. I have secured the agreement of my colleague Derek Mackay, the finance secretary, that all additional convergence funding received will be ring fenced for agriculture. That is only right and proper, given its origins and its purpose, and that is what this Government will do. I understand that people want to get on with spending this funding, but I caution them that we have yet to receive any funding and we cannot spend warm words.

Today, I hope that we can come together as a Parliament and focus on the final part of this six-year-long campaign to ensure its success and the delivery of the funding that is owed to Scottish farming. In doing so, I offer the reflection that this Parliament is often at its best when we can act together and support with one voice a campaign to repatriate money that, plainly, is in the interests of our farmers and crofters, who face very real and pressing challenges in the short and medium term, as we all know.

Therefore, I urge all colleagues in all parties to use today’s opportunity to reaffirm their support for the repatriation of the convergence funding that is owed to Scottish farming, in the hope and belief that our collective efforts will shortly result in success. Scotland’s farmers and crofters deserve no less.

Thank you, Mr Ewing. The cabinet secretary will now take questions on the issues raised in his statement. We need to be very prescriptive today—I can allow 18 minutes for questions and then we will move on.

I declare an interest as a partner in a farming business.

I thank the cabinet secretary for prior sight of his statement. We all agree in this chamber that the EU convergence fund should have come in its entirety to Scottish agriculture. There has always been cross-party support for that stance. The cabinet secretary recognises many of the organisations that have made that argument, but he neglects to mention the 12 new Scottish Conservative MPs who were elected last year, who have also been working hard to achieve a successful result.

The Prime Minister has promised to deliver the fund to Scotland and we will hold him to account on that promise, but given the complete lack of planning by this Government for future agricultural support, how does the cabinet secretary propose to spend this money when it is delivered? It will not be acceptable to spend the money on any one sector of Scottish agriculture. It must be delivered right across all sectors, not just used to plug the hole in less favoured areas and LFASS—less favoured area support scheme—payments that has been created by this Government’s inability to plan ahead. Can the cabinet secretary promise that he will not use it to do just that?

I think that I discerned support there for the campaign—

Just.

Just. It was a positive start and I welcome that.

I also welcome the fact that politicians who are elected representatives from Scotland have supported this campaign. In all seriousness, I think that when we can act together, it helps to deliver results. I hope that that will be the case on this occasion. That is why I am approaching the debate in this way.

As to the disbursement of the money, if I promise to you, Presiding Officer, that the cheque is in the post, I suspect that your reaction may well be one of scepticism. I make it clear that not only is the cheque not in the post, but it is not yet signed.

It is not even written.

Indeed. Therefore, it is premature to start spending money that we do not have. That is a pretty solid message that every farmer in Scotland would understand. However, I have already given the absolute assurance that Mr Mackay—whom I have consulted on the matter in the formal way that is absolutely appropriate in Government—has confirmed that the money will be used solely for Scottish agriculture. That assurance, which I have announced today, is welcome.

Mr Chapman used the phrase “plug a hole” in relation to LFASS funding. That is not correct, because there is no hole in LFASS funding. The problem is that the rules that attach to LFASS mean that the payments might have to go from 100 per cent to 80 per cent next year. I have previously indicated my determination to do what I can to maintain income for hard-pressed farmers—our hill farmers and other LFASS farmers—who perhaps need it the most. I fully intend to make good on that promise. It would help if the UK made good on its promise, which would allow us to provide a real boost to agriculture in these challenging times.

I thank the cabinet secretary for providing advance sight of his statement.

Labour fully supports all efforts to end the convergence funding injustice and to give Scotland’s farmers what is rightly theirs. We should remember that it was as a result of Scotland’s low CAP support payment per hectare that the UK was awarded the convergence uplift in the first place. We urge the UK Government to set a date for the publication of the Bew review as a matter of urgency. The cabinet secretary will know that those who receive the lowest level of support are Scotland’s hill farmers and crofters. Will he therefore ensure that the funds will be used for convergence, which would mean that hill farming and crofting are prioritised in any allocation of support in future?

I genuinely welcome the support from Colin Smyth and the Labour Party. I hope and expect that there will be support from across the chamber. Let us be clear that if we argue among ourselves all the time, it is more difficult to achieve things for Scotland. What gets me up in the morning is doing good for Scotland and, in this case, righting a wrong that has existed for six long years.

Colin Smyth makes the good point that many of those who are in the greatest need are those who farm in our marginal uplands, our hill farms and our island areas. It is therefore right that they should benefit from the convergence moneys, if the promise is indeed implemented by the Prime Minister. We agree in principle that that is the case, but the member will forgive me if I want to see the colour of the money and have it in the bank account before we announce decisions on how to spend it.

We will move on to open questions. If we have succinct questions and answers, we should get through them all.

I thank the cabinet secretary for his continued pursuit of the convergence moneys. Will he explain a wee bit more about what the Bew review was set up to do? Will he join me in calling on the Secretary of State for Scotland to urge his Cabinet colleagues to right this wrong?

The original terms of reference of the Bew review included looking at why the €223 million was not applied to Scottish farmers, as was intended by the EU. That was Michael Gove’s intention, as discussed on 6 November 2017 and again in February 2018. However, the Treasury appears to have intervened and altered the terms of reference so that, instead of looking at what happened and why it happened—why UK Government ministers took the decision not to provide the money to Scottish farmers and what advice was given to UK ministers—the review’s remit was solely to look at the next two years and the convergence moneys that are expected to be available for them. Although we welcome that limited remit, it does not implement the promise that Owen Paterson first made six years ago.

I refer members to my entry in the register of interests.

In a rare moment of agreement with the cabinet secretary, I also think that the convergence moneys should have come to Scotland—and they will. Will the cabinet secretary guarantee that the farmers who were disadvantaged by that historical injustice will be top of the list when ensuring that the situation is righted?

Again, I welcome that statement from Mr Mountain, and those from all members who are supporting this case so that it is followed through and payment made. I, too, hope and expect that payment will be made. It is a very serious situation and there is a real opportunity that I intend to make the most of.

In direct response to his question, I say yes, plainly, those who have been farming land that is of the low average yield per hectare should be entitled to benefit from the convergence money. A lot of solid work will need to be done to make sure that they are. As Mr Smyth said, they are among those who need help most. Just a couple of weeks ago, I met many of them at the Lochaber show with my colleague Kate Forbes, and they are having a tough time, as are farmers throughout the parts of Scotland where farming is a tough existence and job. Therefore, I am determined that they should benefit from the convergence money—once, of course, it is in our bank.

I welcome the comments from the Conservative members that indicate that the money should come to Scotland. Does the cabinet secretary share my concerns that the decision-making power regarding how it may be distributed might be retained at Westminster? I say that in the light of remarks from the new Secretary of State for Scotland about the UK Government taking control of spending money in Scotland. Is that simply a new minister being naive, or is he being mendacious?

I do not think that I am going to stray into talking about mendacity today, as you may be pleased to hear, Presiding Officer, but I have some concerns that there have been a number of suggestions—I will not go into them all, as there is not enough time—that there may still be some intention to attach strings to how the money should be deployed, should it be repatriated. That would be entirely wrong. It would be a breach of devolution and a predation of our powers, and we would not be willing to accept such conditions. However, I hope that reason will prevail and that that will not be the case. I hope that I have also clearly indicated that there is reasonable common ground about the main thrust of how the lion’s share of the funding should be deployed.

I, too, support efforts to get those convergence funds back to Scotland and the cabinet secretary’s indication that the funds will be directed to those in the most disadvantaged areas. Would the CAP information technology system be able to distribute those funds, especially if they are to go to those most in need?

I am confident that the CAP system and its operation would not be an obstacle to the distribution of funds. I should say that those are funds that were intended to have been distributed over the seven-year period between 2014 and 2020. It was not intended that the money be distributed from 2019 onwards. Therefore, we have to be careful in examining the strictures of the CAP system in terms of state aid—in particular, the de minimis rule—and in weighing that up.

Of course, the EU intended that those who most needed this money should get it, therefore I hope and am confident that we will be able find a way for that to happen.

I commend the cabinet secretary and his predecessors’ efforts on the matter, and I roundly condemn the duplicitous UK Government for its treatment. The cabinet secretary talked in his statement and in a reply about doing good for those in need, and said that the money would be directed to agriculture. Is there an opportunity to do good and address need by directing some of the divergence money to the croft house grant scheme?

The croft house grant scheme is pretty much separate from the convergence funding. I had not thought of that. I am happy to consider any suggestions that I get, including from Mr Finnie if he wants to write to me on the matter.

From memory, I would say that the croft house grant scheme has been extremely helpful in enabling us to help several hundred crofters throughout the mainland Highlands and particularly in the Western Isles, in Dr Alasdair Allan’s constituency, and I have been a forthright advocate and a determined deliverer of funding to do just that.

It is an interesting point and I will consider it, but my first reaction is that that is not quite what the convergence money was intended for.

I agree that the funds should be due to Scottish farmers and crofters, but the varied statements of our Prime Minister on so many varied issues might not be so very sound. Having asked for Lord Bew’s review, and the review having reached its conclusions, will the Scottish Government accept its findings when they are published and does the cabinet secretary expect the Prime Minister to accept them, too?

I am hopeful that the findings will be admirable ones that we can support. I had the opportunity to give evidence to Lord Bew and I thought that the response that I had from him and his team was very positive. I got the impression that they understood the arguments and that, perhaps, there was a tacit acceptance of the arguments, which are not very complicated.

I am hopeful about the results. I do not think that I could say in advance that we accept the conclusions of a report that has not yet been delivered, but I am hopeful that the Prime Minister, who has made one of the most unequivocal promises that I have ever seen in 20 years in politics, will make good on that promise. I hope and expect that that will happen, and sooner rather than later.

The issue of convergence funding is not made any easier or fairer as the prospect of a no-deal Brexit draws closer, with potentially disastrous consequences for sheep and beef producers in the Western Isles. Beyond the very welcome loan scheme that is now under way, what else can be done to provide some much-needed financial clarity for farmers and crofters as they make their plans for the future?

The position is that, on the loan scheme in respect of the pillar 1 payments, we have issued 15,570 offers, which are worth €394 million. This is entirely separate from convergence. That represents 95 per cent of the eligible population. After the first week, over 7,500 loan offers have been returned. I urge all farmers and crofters in Dr Allan’s constituency to return their offers as quickly as possible. If they do so, the intention—and my expectation—is that we will deliver payments of nearly €400 million, if everybody accepts their offers, within as early a period as possible, starting in the first week in October.

I praise the team of officials in the rural payments and inspections division that has been administering the scheme, which is very complicated. They have now done it for a few years. This is money that farmers and crofters will receive before Hallowe’en—before 31 October and the possibility of a no-deal Brexit—and it is money that will go into the rural economy to pay the bills of feed merchants, contractors and other parts of the supply chain in the agriculture sector. This is a very important piece of work, and it is probably the main practical thing that we are doing to prepare to mitigate as far as we can the consequences of a no-deal Brexit.

That concludes questions on the ministerial statement on the repatriation of convergence funds that are owed to Scottish farming. I apologise to Donald Cameron, David Torrance, Alex Rowley and Richard Lyle for being unable to take their questions.