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Chamber and committees

Meeting date: Wednesday, October 5, 2016

Meeting of the Parliament 05 October 2016

Agenda: Portfolio Question Time, Supporting Farming and Food Production, Employment Services (Devolution), Business Motion, Parliamentary Bureau Motions, Decision Time, HM Revenue and Customs (Bathgate), Correction


Contents


Supporting Farming and Food Production

The Deputy Presiding Officer (Linda Fabiani)

The next item of business is a statement by Fergus Ewing on supporting farming and food production. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

14:42  

The Cabinet Secretary for Rural Economy and Connectivity (Fergus Ewing)

I am pleased to update Parliament on the support that the Government provides for farming and food production. We are very close to completing the last of the 2015 direct support payments to farmers and crofters and I remain absolutely determined to ensure that every farmer and crofter who is due a payment for 2015 receives it in full.

On basic and greening payments, £2 million more has been paid out since statistics were published last week, and approximately 18,000 farmers and crofters have received a payment. There is now a maximum of 350 who have not yet received a 2015 payment. A few will be ineligible; most others have received a loan. The number who await a balance payment in addition to their first payment is down to 100. Payments under the beef and sheep schemes will be completed this week.

As I indicated on 13 September, we had hoped to start less favoured area support scheme payments in September. Unfortunately, the technical issues that I advised of then have continued and we will not be in a position to begin LFASS payments until later this autumn. However, it is useful for members to remember that 11,000 farmers who are entitled to an LFASS payment have already received loans that are worth £54 million.

Rapid progress is being made to implement the 2016 loan scheme. Letters were sent last week to invite 17,324 farmers and crofters to apply for a loan. As was advised through the answer to a parliamentary question on Monday and the answer to a topical question yesterday, manual checking of a sample of calculations uncovered an undervaluation that affected some potential applicants. The farmers and crofters significantly affected by that undervaluation have been written to again to advise them of their revised loan offer.

Every member should note that no farmer or crofter will be worse off as a result. The error is regrettable, and I apologise to anyone who is affected, but immediate steps have been taken to rectify matters. The deadline for applying for a loan has been extended to 19 October—in other words, by a week—for those who are affected, and officials have advised that all those whose applications have been received by then will receive their full loan entitlement within the first half of November. The loan scheme, which will inject up to £300 million into Scotland’s rural economy this winter, will ensure that farmers and crofters have funding before the date on which they could normally expect to receive their common agricultural policy payments for 2016.

CAP pillar 1 payments form the cornerstone of Government support for farming and food production in Scotland, but funding that is provided under pillar 2 of the CAP also makes a vital contribution. On Monday, I announced £8.8 million in funding for food processing with a visit to McQueens Dairies, which is a family-run business. It has a grant, which is part of that funding, to purchase new equipment that will enable the business to grow while protecting the livelihoods of its workers and among dairy farmers.

Such support contributes to the on-going success of our food and drink sector, which enjoyed a record turnover of £14.4 billion in 2014 and is well on the way to meeting the target of £16.5 billion for 2017. That will be further aided by the development of a national food and drink hub with key partners next year.

On 1 September, I announced £11.4 million to support investment of up to £48 million in sea fisheries, aquaculture and the processing industries. That coincided with the first rural summit with the farmed shellfish sector. Further summits are planned this winter to consider challenges and opportunities in supply chains, in farming and planning and in the fin-fish aquaculture sector.

I am doing all that I can to support how we currently farm and produce food, but it is also vital that we look to the future, which is why I am focused on ensuring the sustainability of farming in Scotland. The fact that farmers of more than two thirds of the Scottish beef breeding herd have signed up to the new beef efficiency scheme indicates that farmers share that focus.

Sustainability is also about growing markets. Officials are analysing responses to our consultation on seeking negligible BSE risk status, which will benefit livestock farmers and potentially many food-processing businesses. We continue to support collaboration among Scotland’s vets, our research institutes and our further and higher education institutions to address the problems of antimicrobial resistance in animals and livestock. That is not just a wellbeing issue but an economic one, as addressing those problems will enable more efficient and profitable food production in the long term.

People are key to the future of farming and food production. This morning, I was privileged to attend a workshop as part of the development of our vision for Scottish agriculture, and I spoke to young farmers after I attended a meeting of the co-operative Farm Stock to address some of its members. At the Royal Highland Show this year, key emerging themes for our vision were published, and today’s workshop focused on what is arguably the most important of those: ensuring that agriculture is recognised as a rewarding career that is accessible to new and young entrants.

That is why I recently announced £7 million in funding to create and develop around 140 new farming businesses across Scotland. In my many conversations with people who are involved in farming and food production across the country, a recurrent issue has been the need to encourage children and young people to recognise that a career in farming and food production—or in the many varied ancillary functions that support it—is a good choice to make. The fact that five out of the 24 recommendations in John Scott’s Scottish sheep sector review relate to education and training underpins that.

The vital statistic that the average age of farmers is now 58 confirms the urgency with which we need to act. Today’s workshop brought together education providers to share what works well in supporting young people who are considering or have chosen agriculture as a career.

That approach will augment the support that the Government already provides in that area: £35,000 to the Royal Highland Education Trust to run 18 food and farming events for approximately 4,000 school pupils and to involve 300 primary pupils in farmers market projects; £420,000 annually to Lantra to work with schools and colleges to identify skills gaps and provide modern apprenticeships; and more than £10 million annually to Scotland’s Rural College for teaching on subjects that relate to farming and food production.

We know that informal support that is delivered by young people to other young people makes a positive difference. I am therefore announcing today additional funding of £20,000 to the Scottish Association of Young Farmers Clubs to create a peer support network in rural communities to complement existing careers advice for young people so that more choose subjects and courses at school and beyond that lead to careers in farming and food production; to add value to existing activities that explain routes into working in farming and food production; and to provide mentoring and buddying for young people who are taking on or starting a farm.

We must get the direct support for farming and food production right, and I remain utterly focused on achieving that. We are still working flat out to complete the 2015 CAP payments, to implement the 2016 loan scheme and to put the 2016 CAP payments on to a proper footing, but additional support also helps to drive forward Scotland’s rural economy and is all the more important during these most uncertain of times.

That uncertainty means that the Government is not waiting for decisions to be made for us about rural Scotland’s future. Instead, through direct and indirect support for current and future farming and food production, we are getting on with the job of making rural Scotland’s future.

The Deputy Presiding Officer

The cabinet secretary will now take questions on the issues that were raised in his statement. I intend to allow about 20 minutes for him to do so, after which we will move on to the next item of business.

Peter Chapman (North East Scotland) (Con)

I thank the cabinet secretary for advance sight of his statement and remind members of my farming interests in the register of members’ interests.

The cabinet secretary has again been dragged to the chamber to explain his inability to get to the farming community money that is rightfully its money and is desperately needed. I remind him that, when he was appointed to his new role, he promised members that getting the information technology system sorted was his first priority and that he was going

“to get in aboot it.”

He has failed miserably. There has been no step change in the speed of the money going out; it continues to flow at a snail’s pace.

I make no apologies for repeating that the debacle has caused more hurt, heartbreak and worry to the farming community than any other single issue in the past generation. It has meant that families across rural Scotland—

The Deputy Presiding Officer

Can we have a question, please, Mr Chapman?

Peter Chapman

Yes—I am nearly there.

The Deputy Presiding Officer

Can you hurry up?

Peter Chapman

That has meant families sitting round kitchen tables worried sick about how they will pay their bills. That is the reality.

I repeat the question that I asked yesterday, which the cabinet secretary completely failed to answer. Why are only 17,324 farmers being offered a loan under the scheme, out of 18,300 businesses that are eligible for CAP payments? Are the 1,000 businesses the same ones that still await substantial amounts of money from the 2015 scheme?

Fergus Ewing

Let me introduce a few facts in answering that. In respect of the 2015 payments, 97 per cent—I repeat that: 97 per cent—of all basic payments have been settled in full. That is all but 3 per cent. I want that 3 per cent to be settled in full if the claims are eligible, but 97 per cent is not quite in accordance with the tone of Mr Chapman’s contribution.

Other facts are that all but four of the 1,099 Scottish upland sheep support scheme payments have been paid in full, all but nine of the 7,314 Scottish suckler beef support scheme payments have been paid in full and payments that are worth £54 million out of the total £66 million of LFASS payments have been paid in full.

I absolutely understand, and it remains my view, that many farmers and crofters have suffered difficulties, some of them seriously. I will not be satisfied until everyone is paid in full, but I can tell Mr Chapman that, when I was at Farm Stock this morning speaking to farmers who are still farming—not sitting here making speeches about farming—they said that the national loan scheme to inject £300 million into the rural economy was a sensible measure. What a shame that the Tories do not get that.

Peter Chapman

On a point of order, Presiding Officer. I have asked that question twice and I have had no response whatsoever—I got none whatsoever today. Twice I have asked it and had no response.

The Deputy Presiding Officer

That is not a point of order. If you have a problem with the Government’s response, you can write to the Government.

Rhoda Grant (Highlands and Islands) (Lab)

I, too, thank the cabinet secretary for prior sight of the statement. I understand that an independent technical assurance review of the IT system will take place, which I welcome.

What help is the cabinet secretary giving to the 350 people who have received nothing so far? What further information can he give us about what will happen if the IT system proves to be incapable of delivering? Is a disaster recovery scheme in place? The situation must never happen again.

Fergus Ewing

Those are sensible questions, which I will answer in turn. As I said in my statement, the majority of the 350 people have already received loans of the majority of their entitlement. We are working through the remaining cases that await full payment, depending on confirmation of eligibility. I assure the member that that work is going on.

The member also asked, fairly, about the computer system. That is the top priority for me to resolve. Senior officials and I are busting a gut to do so. We are working with the contractor in a productive fashion and we have seen a great deal of progress. Many of the problems have been addressed successfully with what are called IT fixes, and progress continues apace as we speak. Since last week’s meeting of the Public Audit Committee, £2 million of payments have been processed. I expect most of the rest of the full payment process to be completed by the end of October.

There are difficulties, as the member fairly pointed out, but I am confident that, in accordance with the timetable that I indicated in my previous full statement, we will sort the problems out in the early part of next year.

The Deputy Presiding Officer

Many members wish to ask questions. We will get through more questions if questions and answers are as succinct as possible.

Emma Harper (South Scotland) (SNP)

I appreciate that everything is being done to remedy matters, but the situation could be confusing for some. Will the cabinet secretary clarify what people need to do about the first letter and the second letter that they received in order to apply for a loan? What will happen if people are not currently eligible for a loan?

Fergus Ewing

Those who receive a loan offer should return the slip if they wish to accept it. Those in respect of whom the undervaluation was made will be contacted by the local office and will receive a second letter, and they should return the opt-in slip by the 19 October deadline. If they return the opt-in slip from the second letter, they do not need to return the first opt-in slip. If they wish, they should of course contact the area office.

Both letters have details about who should be contacted. The rural payments and inspections division website also contains extremely useful information, as most farmers will know. It is a useful port of call.

We want to ensure that the bulk of the payments are made in the first fortnight of November and that is what we are seeking to do. We estimate that we might seek to make a further 800 loan offers. They fall into various categories—entitlement cases, private contract cases, cross-border cases and cases where we feel that there might not be eligibility—but what I will say about all of them is that we are busting a gut to ensure that as many people as possible who are entitled to a loan get one. That includes everybody except, of course, those who are ineligible under the scheme rules. My officials are working flat out—including getting overtime, which is a sensible measure—to ensure that every farmer can get a loan under the scheme if he or she is so entitled. That will involve a lot of detailed work, but I am determined that it will be carried out, as it is being carried out.

Finlay Carson (Galloway and West Dumfries) (Con)

This is becoming like “Groundhog Day”, with the cabinet secretary regularly appearing to apologise for the continued technical issues.

Mr Ewing told members that we should refer our issues to the local office; I was advised that payments are being made by the local office and sent to central payment teams in Edinburgh. Farmers are being told that payments are being approved and they have been given payment dates, but no money has been forthcoming.

An example—

The Deputy Presiding Officer

We do not have time for examples. Can we have a question, please?

Finlay Carson

Since May 2016, one farmer in Dumfries and Galloway has been advised on five separate occasions that the payment will be made by the end of the week, and on five separate occasions that has not been the case.

The Deputy Presiding Officer

May we have a question, please? This is questions on a statement.

Finlay Carson

Thank you, Presiding Officer. In the words of Mr Ewing’s colleague Alex Neil, this has been a “fiasco”. Given that it has been a total failure, why has no price been paid for it?

Fergus Ewing

It is reasonable for me to say that 97 per cent of claims have been paid in full. I think that the rhetoric is a bit past its sell-by date. [Interruption.] Mr Carson could have supplied me with the details of the case that he has highlighted before he came to the chamber. If he had wanted a detailed answer, I would have given it to him. If he or any member raises an individual case, I will look into it; however, he did not do that. Instead, he came here and talked about one case without going into circumstances. That is not really very good practice, but I guarantee that I will look into the case as soon as I receive a relevant request so to do.

Claudia Beamish (South Scotland) (Lab)

I welcome the £20,000 additional funding for a peer support network for Scotland’s young farmers, but what is the Scottish Government doing to identify more starter farms for new entrants? What, indeed, is the Scottish Government doing to develop the contribution of organics, eco-agriculture, agri-forestry and local supply chains, which will help the next generation of farmers to tackle climate change?

Fergus Ewing

Again, those are all very fair points from the Labour Party. We work very carefully and closely with the organic sector; I recently met the Soil Association and we will engage with it again. Plainly it represents a niche market, but it is still an important part of farming.

As for further work to identify land for young entrants, I am convening a meeting with all public bodies that might have land available to ascertain whether we can do more. I refer the member to the Forestry Commission, which has a scheme that has helped young entrants; indeed, I met several of them at the Royal Highland Show at Ingliston on 23 June. Just this morning, I had a very interesting discussion and dialogue with four young farmers on precisely these matters and how we help them make a success of entering into farms. I am delighted that we are doing that work, but of course there is a lot more to be done and we are getting on with it.

Mark Ruskell (Mid Scotland and Fife) (Green)

On 13 September, the cabinet secretary said that work to support agri-environment schemes was

“literally impossible ... because of the lack of ... clarity from the United Kingdom Government”—[Official Report, 13 September 2016; c 30.]

on pillar 2 and the rural development programme. This week, we received that clarity when, on Monday, the UK Government announced that farmers are eligible for funds up to the point of Brexit. When will we get a definitive statement from the Scottish Government on its commitment to pillar 2 and agri-environment funds, or is it Mr Mackay who is now creating the uncertainty and the problems?

Fergus Ewing

Let us get to the facts here: we have not had clarity from the UK Government on pillar 2, and we have been seeking clarity on pillar 2 payments since the day after Brexit.

Pillar 2 payments support agri-environment schemes, forestry and LFASS. They are absolutely vital in supporting vulnerable communities and valuable greening schemes. I agree with that, but the brief statement that we heard yesterday begs far more questions than it answers. It does not say what will happen between March 2019 and March 2020—one whole year of the Scottish rural development programme. According to a leading member of the farming community yesterday, the uncertainty remains.

I pledge that as soon as we receive certainty and clear facts about continuance of all the funding under pillar 2, we will be in a position to consider providing the guarantees that so many people in the rural economy desperately seek.

Mike Rumbles (North East Scotland) (LD)

On Thursday, the director general economy said in evidence to the Public Audit Committee that the review of the current system

“could conclude that the system as it is is absolutely fine and that we should just continue as we are.”—[Official Report, Public Audit Committee, 29 September 2016; c 30]

Does the cabinet secretary accept that continuing with the current system is not an option, that he needs to start planning now for a new Scottish system of farm support for post-2020 when we have left the EU and that the responsibility for such a system will be entirely his? Will he set up a group of civil servants to look at the options for the future post-2020?

Fergus Ewing

We have been working on this for a very long time. We set up a team of civil servants to work on it a long time ago.

Mike Rumbles

When?

Fergus Ewing

There goes Mr Rumbles again, barracking from the back benches as always. Let me continue to try to answer his question.

At the Royal Highland Show in 2015, we set out a debate about the future of agriculture in this country and we received lots of responses from people in the countryside. We did not receive a response from Mr Rumbles, right enough, but he is making his voice audible now, at least. His criticisms of the Scottish Government in respect of the flaws in the CAP policy, in particular on slipper farming, are way off the mark. Members will recall those criticisms from the other day, when we did not hear that it was the Liberal Democrats in the form of Alistair Carmichael who—in a press statement in 2013—praised the common agricultural policy and the slipper farmer payments. He said that it was the best result that Scotland could ever get. There we have it—the same old Liberal Democrats. One thing from one side and one thing from another side—AKA Mr Rumbles.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

Given the importance of primary and processed food production in my constituency, I welcome the announcements that the cabinet secretary has made about supporting the food industry. What steps can he take—or can he advise what steps the UK Government is contemplating—to protect those industries’ access to labour from other parts of the EU on which they are critically dependent?

Fergus Ewing

That is an extremely serious matter. I have made many visits to farms and great co-ops such as Aberdeen Grain Services, Ringlink Scotland or Grampian Growers and we are reliant—whether for raspberry picking, tattie picking or a range of jobs in the rural community—on people who come from the EU to work here, who choose to do so, who are welcome here, and who, in many cases, are migrant workers.

As Stewart Stevenson knows from his constituency, in respect of fish processing, we are utterly reliant on the good will of people who are welcome in this country. The announcements emerging from the Conservative conference are of the most right-wing and reactionary variety that I have heard in 17 years in politics. They are quite shocking and quite disgraceful.

Douglas Ross (Highlands and Islands) (Con)

As a former chairman of Lower Speyside Young Farmers in Moray, I noted the announcement of £20,000 for Scotland’s young farmers. That followed the Scottish Government’s decision in January to end the SAYFC annual grant of £66,000 and to reinstate less than half of that following pressure from the sector. Can the cabinet secretary confirm that the money being provided to young farmers now is still less than last year, and will he give a commitment to reinstating the regular grant to young farmers in future years?

Fergus Ewing

I am sorry to disappoint the young farmer, but I reassure him that I was speaking to a group of young farmers this morning. I was able to confirm the very substantial support—

Douglas Ross

Sixty-six thousand pounds.

Fergus Ewing

There we go again. I confirmed the support that the Scottish Government has been delivering this year. I am happy to write to the member with the full details.

Of course, we want to help young farmers and, by helping them, we want them to have access to the single market and to be able to hire people who come from Europe and are happy to do so, and not send them away and say that they are unwelcome in this country.

Colin Smyth (South Scotland) (Lab)

I will continue with what I hope is the reasonable line of questioning from Labour. Bearing it in mind that we are now into October, can the cabinet secretary clarify at what date he expects all farmers who are waiting for LFASS payments to have received a loan? How many of the 11,000 farmers who are entitled to an LFASS payment have received a CAP payment? How many of those 11,000 have had their LFASS payment delayed but have received a loan? How many of the 11,000 have received neither a CAP payment, nor a loan?

Fergus Ewing

I am sorry, but I am not quite sure what the member is talking about. Is it solely about LFASS?

Colin Smyth

Yes.

Fergus Ewing

Okay. The number of claims to be paid is estimated at 11,500 and the total due is £66 million; of that, approximately £54 million has been paid. As I said in my statement, we are working very hard to deliver the remaining IT fixes to enable payment processing to begin. Progress has already been made with some elements of the IT fixes in order to deliver the LFASS payments. As I also said in my statement, I believe—I can check this and write to the member if my memory is incorrect—that we plan to make all those payments this autumn. However, we should be mindful of the fact that all those payments are the remaining 20 per cent, because in almost every case those making the claims will have received a loan of around 80 per cent.

I recognise that the situation is not perfect and not satisfactory, but my pledge to those involved is that, by the end of the autumn, we will have completed those payments, if we possibly can. If there is any further difficulty, I will of course, as I always do, report back to Parliament. I am sure that I will not be short of opportunities so to do.

Gail Ross (Caithness, Sutherland and Ross) (SNP)

I, too, am an ex-member of the SAYFC, and I welcome the announcement of additional funding for young farmers clubs and hope that those in my constituency will benefit. How will that new initiative work with the established formal routes that are provided by the likes of Scotland’s Rural College and the University of the Highlands and Islands?

Fergus Ewing

I was at a workshop this morning with young farmers and the SRUC, and I know that they have good working relationships. We will take that forward with them.

We appreciate very much the support of banks for young entrants. I was struck by the real enthusiasm that people in the banking community, who are very embedded in the rural community in Scotland, showed by going out of their way to provide mentoring for young people, which can be even more important than the provision of finance. They provide the right kind of mentoring and finance. I very much welcome the positive role that is played by the banks and many others in helping those young people.

The Deputy Presiding Officer

We have gone over the 20 minutes, but I can squeeze in Edward Mountain if he is brief.

Edward Mountain (Highlands and Islands) (Con)

As instructed, I will be brief. I thank the cabinet secretary for giving me sight of his statement and I declare an interest in that I am part of a farming partnership.

Last week, the director general economy said that the problems with the CAP payments were no one’s fault and that it was just optimism bias on behalf of the Government. I am not sure what that means, but I want to ask the minister a simple question. Without any optimism bias, when will the final 20 per cent of the 2016-17 payment, worth about £60 million to £80 million, be paid to farmers? What I would like, minister, is an equally quick answer: the month and the year, please.

Fergus Ewing

If I heard the member correctly, he is referring to 2016-17, not 2015.

Edward Mountain

It is 2016-17.

Fergus Ewing

Well, 2016-17 is next year, and I have already covered that in the statement that I made to Parliament before. However, I think that there is an element of confusion in the question, so I will be happy to write to the member, if he so wishes.

The Deputy Presiding Officer

That ends the statement and questions on supporting farming and food production in Scotland.