Meeting of the Parliament

Meeting date: Thursday, January 23, 2020

Official Report 1061KB pdf

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Farming and Crofting (Support)

The next item of business is a statement by Fergus Ewing on providing financial stability for Scotland’s farmers and crofters. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

14:00  

I am determined to do all that I can to provide financial stability for Scotland’s farmers and crofters, but the United Kingdom Government seems equally determined to make that impossible. For three years, I have pressed the UK Government relentlessly to deliver on the promises that its Brexiteers made on future funding for farming and food production.

“The UK government will continue to give farmers and the environment as much support—or perhaps even more—as they get now.”

That was what George Eustice, the UK rural affairs minister, promised in 2016. However, all that we have had is a letter from a UK Treasury minister, confirming that Scotland will receive £472 million to enable us to provide the 2019 common agricultural policy payments, and a lecture about how the UK Government is shifting its policy on supporting farming to

“value for money for the taxpayer”.

That is an insult to Scotland’s farmers and crofters, and I have written to George Eustice, urging him to disassociate himself from his colleague’s remarks.

That signals that, far from receiving a Brexit bonus, we face a Brexit boomerang. I throw my reasonable requests for financial clarity and certainty to the UK Government; it throws them back at me with nothing in return.

Any changes that are being made are unwelcome. We are moving from having seven years of guaranteed funding from the European Union, and knowing what that funding envelope includes, to having to wait each and every year for the UK Government to say how much money will be received.

Despite that, I will do my utmost to deliver as much certainty and stability for farmers and crofters as I can. Last December, I published the 2019 CAP payment strategy, which set out when payments would be made to our customers for each of our pillar 1 and pillar 2 schemes. I am confident that we will meet the targets in the strategy, which build on a solid track record, in recent years, of addressing the issues in the CAP information technology payment system and getting funding to farmers, crofters and land managers as promptly as possible. The IT system is now working and it is stable. Last year, all the payment targets were either met or exceeded.

We have now paid out £409 million in basic, greening and young farmer payments for 2018, and there are fewer payments left to be made during the tail period than in previous years. Nonetheless, I have asked that the final 23 complex and highly technical claims from 2018 be prioritised as a matter of urgency.

We have also paid out £46 million in coupled support payments. We are still the only part of the UK to provide that extra support directly to farmers and crofters.

In the pillar 2 scheme, we have paid out £3.5 million in forestry grants, enabling Scotland to exceed its tree planting target. We have also paid out £19.5 million through the agri-environment climate scheme and £63.3 million through the less favoured area support scheme. Until recently, we were—again—the only part of the UK to provide additional support to those who farm on the most marginal land.

Presiding Officer, you will recall that it was the UK Government’s reckless intention last October to leave the EU with or without a deal in place. I was not prepared to allow that to happen without providing Scotland’s farmers and crofters with as much financial stability as possible. The Scottish Government therefore put in place a national loan scheme, which gives eligible farmers and crofters 95 per cent of their basic payment entitlement at the earliest point ever under this CAP. Through the scheme, £334 million was paid out last October to 13,837 claimants. Furthermore, our payment was made about two months earlier than payments were made in any other part of the UK.

In December 2019, we launched the LFASS loan scheme, which is in addition to the basic payment loan scheme, and, to date, we have paid out £38.2 million to 7,595 claimants. Combined, the two loan schemes have so far paid out £378 million to those claimants. The objective has been to put money into farmers’ and crofters’ hands, where it belongs, when they are having to deal with Brexit uncertainty created by the UK Government. That figure represents 69 per cent of the total £550 million that is due to be paid out by around June this year. The remaining top-up basic, greening and young farmer payments will start to reach bank accounts in early February.

Those who did not take up the offer of a loan, and who are therefore waiting for all their 2019 CAP payments, will be prioritised. Payments in the pillar 2 schemes will begin in early April. Moreover, we will continue to improve the efficiency of the whole payments system by seeking to move further to a fully digital application process. Through our area office staff, we will provide practical support to the remaining 9 per cent or so of applicants who still submit applications on paper, to enable them to apply online. We will contact those applicants and offer them one-to-one sessions with staff who have a wealth of experience in that work, as we know that that approach is likely to be efficacious.

Those are not the only payments that our farmers and crofters will receive this year. After years of campaigning, which was led by the Scottish Government and supported by this Parliament and key stakeholder organisations, the UK Government finally agreed to right the historical wrong of keeping back the EU convergence money. As a result, Scotland will now receive historical funding of £160 million, and I have already advised Parliament of my intention to split that between the current financial year and the next. I previously advised Parliament that that would be done in two equal payments of £80 million. Since then, however, I have engaged with stakeholders including the Scottish Crofting Federation and the Scottish Tenant Farmers Association and have heard their concerns about the need to ensure that more of the funding reaches those who farm in the most marginal areas. Accordingly, I announced a further package of measures for farmers and crofters, which includes redistributing an additional £10 million in 2019-20 to those who are in the most challenging areas, to be drawn down from the second tranche of convergence funding.

I advise members today that the funding will be allocated to those who need it most—farmers and crofters in regions 2 and 3, as is explained in the handout that I provided to members with this statement. The split of the £10 million will be weighted to region 3, with 70 per cent of the funding going to that region and 30 per cent being allocated to region 2. There will be no change to the voluntary coupled support component, which will be retained at £15 million as per my previous announcement. That funding will be paid by the end of March, in addition to scheduled pillar 1 payments.

I want to be sure that the level of the payments that are received by individuals strikes the right balance between preventing excessive payments and ensuring an appropriate level of support for larger, more productive businesses. I therefore confirm that a cap of £55,000 will be placed on the basic payment element of the funding, which will be the maximum that any business or individual farm can receive. Although there are no conditions and no specification as to what the funding can be used for, I encourage farmers and crofters to consider how best they might apply it.

We are all aware of the climate emergency and the need for all sectors—including agriculture—to do more to cut their emissions. There is a lot that farmers and crofters can do in that space to reduce their carbon footprint and improve their efficiency and productivity. However, we should acknowledge what they already do and what this Government is already supporting. Through greening, the agri-environment climate scheme, the beef efficiency scheme and forestry grant schemes, approximately one third of current funding is tied to reducing the impact of the sector on the climate or to improving biodiversity.

Unlike the UK Government, the Scottish Government considers that our farmers and crofters already deliver value for money for the taxpayer. That is why we commit today to providing farmers and crofters with support totalling £640 million in this CAP payment year. That is what this Government delivers for Scotland’s rural economy. Through our payment strategy for 2019 and by our actions, this Government is providing Scotland’s farmers and crofters with certainty, clarity and, above all else, financial stability.

The cabinet secretary will now take questions on the issues that were raised in his statement. We have about 20 minutes for that.

I declare an interest as a partner in a farming business, and I apologise for arriving slightly late. I thank the cabinet secretary for prior sight of his statement.

It is pretty rich for the cabinet secretary to criticise the Westminster Government in his statement. The truth is that, for three years, the Scottish National Party Government has done all that is in its power to make a Brexit deal impossible and, far from giving Scottish agriculture any certainty about future payment plans, it has only tried to increase grief, grievance and division between this place and Westminster for political point scoring. The cabinet secretary has wasted three years when he should have been planning to implement a system of support that is tailor-made for the needs of Scottish agriculture. That is the big prize that Brexit offers, but we still await any idea of what he thinks is going to happen.

The cabinet secretary boasts about making payments on time. However, he can still deliver payments on time only with loan schemes, because the expensive IT system still does not work properly five years on, despite his claim to the contrary. In the recent past, it was an unmitigated disaster that had farmers in despair. This year, the cabinet secretary used £14 million—

I had better warn you that your one minute is up. You are at 1 minute 30 seconds, and I have not heard your question. You had better ask it right now.

Yes, indeed. Does the cabinet secretary intend to use £42 million of the remaining £70 million of convergence funding to fill the shortfall in LFASS payments next year, bearing in mind that the shortfall should be funded from the Scottish Government budget?

Where does one begin? Let me just answer the question, which is a duty.

First, I was delighted that the UK Government finally acknowledged the error of its ways. It committed what it admits was an historic injustice in wrongly withholding £160 million from Scotland’s farmers and crofters, and it did that for six years. If I held on to property that belonged to someone else for six years, I would probably not be here; I would be in Barlinnie. However, that is what they did, and for them now to take this haughty attitude beggars belief.

Secondly, we paid money to our farmers and crofters this year through the basic payments loan scheme around two months earlier than the rest of the UK. Although they are called loans, they are de facto advance payments, and I can tell members—I think that Mr Chapman knows this—that they were very much appreciated by farmers who were desperately worried about Brexit.

Thirdly, there is no Brexit deal on farming. We do not know whether there is going to be a trade deal. Some say that there will be one, including Theresa Villiers, whom I met last Monday. Most people think that that is incredibly optimistic. If there is no deal, there will be a tax on exports to EU countries—of which we will no longer be one in a few days’ time—of 49 or 50 per cent on sheep meat. At the same time, there might be no equivalence to ensure that meat that is imported to the UK from countries in the Americas, for example, meet the high standards here, thereby undermining our whole sector.

It is simply not possible to finalise any system of support for farmers and crofters in Scotland or elsewhere in the UK until those huge uncertainties are resolved, and every farmer I have spoken to is concerned about that.

What a shame it is that the Scottish Tories just do not like good news. They are desperate for bad news, and when good news comes along they just flounder around—they do not know what to do.

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

Let us be clear about why we are here. When the cabinet secretary made his announcement on the allocation of the first £80 million tranche of EU convergence funding, he got it wrong. He did not listen to the warnings and calls that it should not be the source of funding to plug the LFASS gap. The backlash against that decision forced him into his hurriedly arranged announcement of a further £10 million of support to farmers and crofters, but there was no detail. The figure was plucked out of the air to placate criticism.

Today, we have that detail, which I welcome, but it remains the case that using £10 million of funding from next year will leave just £70 million, and continuing to use the fund as a source of funding to plug the LFASS gap will take a further £42 million. Why cannot the cabinet secretary rule out here and now raiding the fund yet again to cover up the fact that, when he made his commitment on LFASS, he did not have the budget to deliver it and needs to find that budget from elsewhere?

It is a matter of fact that I made my pledge absolutely clear when I met the LFASS committee of NFU Scotland in, I believe, early 2019. I said that my pledge was to prevent the diminution of the real income of farmers in the most challenging areas through the LFASS scheme, and that I would seek to do that by winning the convergence campaign or by finding another solution. We won the convergence campaign, and therefore I have entirely delivered the promise that I made. That is accepted, I believe, by those who were present at that meeting, and I have made it clear subsequently.

Colin Smyth says that we did not know what we were doing when we made the announcement. I am afraid that he is wrong about that. The most substantial modelling was carried out by my officials; overall, I think that 33 different schemes were modelled. His glib assertion, made without actually checking any facts, that we somehow made that original—

Listen to the question—it was about the £10 million.

I am trying to answer Colin Smyth’s question, but he is barracking me. I do not mind.

We did detailed calculations. However, from the reaction that we had, it was plain that we did not get it quite right. I admitted that, and I responded. I met with the Scottish Crofting Federation—I had already met with NFUS—and we put forward alternative proposals. My belief is that that improvement has been welcomed by the majority of people.

I appreciate that not everyone will be happy—making everyone happy is an aim that cannot realistically be achieved. However, the announcement today, with the placing of the cap at the right level—something that neither of the Opposition spokespeople has mentioned—and with the substantial increases to the region 2 and region 3 components of the payments, will be broadly welcomed.

Moreover, I wanted to make sure that the money was paid out in two tranches, with the first tranche coming before the end of the current financial year. We were in a position to start that work only around October last year. It is a great achievement to have devised, discussed, agreed and implemented a scheme by the end of March this year. I am profoundly grateful to my officials for their excellent work in enabling our farmers and crofters to receive that money by the end of March this year.

Nine members wish to ask questions and there are 13 minutes in which to do so. I ask for succinct questions and, if possible, succinct answers.

Does the cabinet secretary share my sorrow and anger that we are being forced to leave the EU next week and that, as a consequence, our farmers and crofters are no better off? Indeed, they could be worse off, not least because of the loss of free trade and migrant labour, with no certainty about what will replace the benefits of EU membership.

Yes, I share Maureen Watt’s sentiments. The Scottish Government has consistently underlined to the UK Government that leaving the single market and the customs union will cause significant disruption to trade in animals and plants, food and drink products, and agricultural inputs such as seeds, pesticides and fertilisers, as a result of tariffs, non-tariff barriers and disruption to existing trade routes. We have been clear that the availability of skilled and unskilled labour from an EU-wide pool is essential for our agri-food businesses and producers.

This week, the First Minister made clear again just how much we value and appreciate our fellow EU citizens who have chosen to make their home here. The Scottish Government will have more to say in the near future about immigration policy and the need for a tailored solution in Scotland.

I, too, declare that I am a member of a farming business.

The statement is all about distributing moneys. It contains no ideas for the future, and nor does the cabinet secretary’s agriculture bill. When it comes to the future, does the cabinet secretary have any ideas of his own?

The statement was made to provide an update on the financial payments. I do not know whether Mr Mountain thinks that that is unimportant but, if he does, he is entirely wrong. It is absolutely essential for farmers and crofters, who in many cases operate as businesses—sometimes substantial businesses—to have clarity about when they receive funds. I believe that Mr Mountain is or was in business and that the same applies to some of his colleagues. They should therefore understand that point better than they appear to. It is absolutely essential that we deliver information about when farmers and crofters will receive the funds to which they are entitled. For the Tories to pooh-pooh that is a failed strategy on their part.

We are of course working hard on developing future options. Mr Mountain has completely ignored the fact that, in June 2018, we published our document “Stability and Simplicity: proposals for rural funding transition period”, which set out a clear path for our farmers and crofters.

That had 47 questions and no answers.

The UK Government’s so-called plans were excoriated by the National Audit Office. The ELMS—environmental land management system—plan was ripped to shreds. Mr Mountain should look at the NAO report on that from last June and be worried about the future of payments in England.

If members are not happy about the answers, they should not barrack from the sidelines, please, because I have to hear what is being said.

I declare a share in a small registered agricultural holding.

Will the cabinet secretary update us on what will happen following the Bew review, which recommended an additional £51 million in funding?

The Cabinet Secretary for Finance, Economy and Fair Work has received confirmation from the Treasury that half of the money recommended by Bew—£25.7 million—will be paid in two equal parts, in financial years 2020-21 and 2021-22. However, we do not have from the UK Government a clear statement on future funding for all aspects that are covered by the EU, and obviously we are pressing on that.

The statement highlights the need for agriculture to cut emissions. Will the cabinet secretary join me in welcoming the recent WWF report entitled “Delivering on Net Zero: Scottish Agriculture” and today’s Committee on Climate Change report entitled “Land use: Policies for a Net Zero UK”, which set out a range of measures that will allow agriculture to drastically cut emissions? Will he commit today—

Stop right there for just a wee minute. I might be missing this, and I am happy to be corrected, but what does that have to do with the statement?

It was in the statement, Presiding Officer. That is why I said:

“the statement highlights the need for agriculture to cut emissions.”

Right. I have been corrected. Go for it—but briefly.

Will the cabinet secretary commit to assessing the contribution that the recommendations of those reports can make to the way forward for a sustainable farming and land use structure in Scotland?

I acknowledge that the CCC and WWF reports make an important contribution to the debate. I have noted some of the recommendations from WWF, and I hope to meet the organisation shortly to discuss the issue. Arrangements for that are in hand, or they will be shortly. On Monday, I met Chris Stark of the CCC and we had cordial discussions.

We recognise that we need to do more to cut emissions, because we have clear statutory targets, so we will of course address that. However, we should acknowledge the good work that farmers and crofters do. Many of them sometimes feel a bit beleaguered, because the good things that they do are not sufficiently recognised. I hope that we can all acknowledge and recognise that some of the things that they do are public goods, such as the maintenance of permanent grassland and their contribution to biodiversity. However, they need to do more. We are working on a series of measures in that regard, which I hope that the vast majority of farmers will adopt and accept.

I thank the cabinet secretary for providing early sight of his statement. I am sure that farmers and crofters will welcome the money.

My question is in a similar vein to Claudia Beamish’s. The cabinet secretary mentioned the climate emergency, but he also said:

“there are no conditions and no specification as to what the funding can be used for”.

How will the Scottish Government assess the impact of the moneys in addressing emissions cuts?

It is for farmers and crofters to assess how they use their funds. It is sensible that they consider using the money for investing in what they do. There is a strong case that the Farm Advisory Service can provide useful advice on that. However, as I said in answer to the previous questioner, we accept that we need to ensure that our climate change commitments are met.

We are looking extremely carefully at what more farmers can do. I will finish with this statement: around one third of the current money that is paid out under the CAP to farmers contributes directly to the environment, some of it to addressing climate change. Some of it contributes indirectly as well, and I think that that is understood in the chamber—I hope that we can build on that in the coming months.

I welcome the news that the LFASS loan payments have begun. Can the cabinet secretary advise whether there is still time for individuals to apply for a loan payment?

Yes, I can, and I am glad that Mr Torrance has raised that issue, because I make a plea to LFASS recipients and those entitled to LFASS who have not yet returned the loan offer document to please do so as quickly as possible. If someone has lost their document or cannot find it, they must let the rural payments and inspections division know and a duplicate will be sent to them. We want to pay people the money to which they are entitled, but to do so we need the signed offer of loan acceptance. This is a plea for the remaining loan offer documents. As soon as we get them, we will get on with the job of paying out the remainder.

Just two months ago, during a well-publicised farm visit to Castle Douglas, Michael Gove and Alister Jack announced that the UK Government was committing to the same level of farm support that Scottish farmers receive every year, until 2024. Is the cabinet secretary saying to Parliament that the Scottish Government has to date received no such undertaking or commitment in writing from the UK Government on farm support until 2024?

Yes; I can tell Mr Rumbles that we have not received such an assurance in writing. I know that statements have been made in the newspapers but, with respect, Governments cannot govern on the basis of what is printed in the newspapers. We can act only once we have copperplate, unequivocal assurances in writing, which must be provided to the Cabinet Secretary for Finance, Economy and Fair Work.

I have got a letter that says that the intention is to make payments for future years. It says what the payment will be this year. Incidentally, it does not mention Lord Bew’s money, nor does it confirm technical matters, such as the rate applicable for currency exchange and how that will be dealt with. Most important is that it says:

“This decision on funding for 2020-21 should not be taken as a precedent for these Spending Review decisions.”

In other words, the payment for this year should not be taken as a precedent for the following years. If anyone here got a letter that said, “You can’t be sure that the figure this year will be met next year,” would you take that as an assurance or would you take that as, “Goodness me, I am pretty worried about what I’m going to get next year”?

I replied to Mr Eustice on 17 January, seeking confirmation. The Tories are shaking their heads, but I am just reading out what the UK Government said. I have here what it said and it is not an assurance in writing. When will it get around to that?

The last point that I will make is that the EU plans things on a seven-year basis. Farming is a long-term business, so under the EU—which apparently the Tories now hate although most of them used to support it—we knew where we were and farmers knew where they were for seven years at a time. Now, we do not know where we will be after 12 months. The Tories think that that is good news; we do not.

I will try to take the last two questions if they are brief.

I welcome the fact that the cabinet secretary acted on the concerns expressed by crofters and that he is now allocating all of the £10 million to those on region 2 and 3 land. Will he explain further what impact that will have on those payments and when he will be able to set out his plans for the year 2 tranche, due in the next financial year?

In thanking the member for his comments, I also thank the crofters I met in his constituency in October for a very useful exchange. Since then, and in the statement, we have made it clear that in relation to the alteration since the original statement, the region 3 payment rate has increased by 92 per cent from the original rate and region 2 has seen an increase of 65 per cent. That ensures that a significant proportion of the support is directed to those farming in our marginal and remote areas. I hope that those changes, which I explained and alluded to earlier, will be welcomed by the vast majority.

I refer members to the farming and crofting entries in my register of member’s interests.

The cabinet secretary’s statement refers to the payment being made by the end of March 2020. Can he be any more specific, given that many farmers and crofters in the Highlands and Islands will rely on that funding, and given the fact that this is an important time of year for them, with lambing beginning and so on?

I have been as specific as it is wise to be at this stage. It is not so very long until the end of March. We are now nearly at the end of January.

The important thing is to ensure that the scheme is administered successfully, as all previous loan schemes have been. I take the point that Mr Cameron makes; it is perfectly fair and valid. However, I will stick with the assurance that I have made.

Also, in the interests of clarity, following today’s statement, businesses that are entitled to receive a convergence payment will know that they will receive it by the end of March. I have also indicated the payment schedule for basic payments and the other payments. I hope that all that information will be of use, will help, and will be appreciated by our farmers and crofters throughout Scotland.