Meeting of the Parliament

Meeting date: Wednesday, October 25, 2017

Official Report 929KB pdf

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Common Agricultural Policy Convergence Moneys

The next item of business is a statement by Fergus Ewing on common agricultural policy convergence moneys due for Scottish farming. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

14:51  

Once again I find myself raising the matter of CAP convergence moneys with members in the chamber. That is because Scottish farmers are still owed around £160 million in CAP funding that the United Kingdom Government has thus far failed to release or even acknowledge. I will remind Parliament what this dispute with the UK Government is all about.

Under the current CAP, the UK will receive an extra £190 million of funding over six years for direct payments, due to a process known as external convergence. That process was put in place by the European Union to redistribute payments more fairly across the EU. Europe said that all countries receiving less than 90 per cent of the EU average payment rate per hectare would reduce the gap by a third by 2019. In addition, all member states are guaranteed to achieve at least €196 per hectare by 2019, which will benefit the Baltic states in particular.

The UK received extra money—convergence money—under this process only because of Scotland’s very low payment rate per hectare. Indeed, the rate was one of the lowest in the EU at the time. Scotland’s average per hectare rate, at €130 per hectare, was around only 45 per cent of the EU average, while every other country in the UK was above the EU’s 90 per cent threshold for triggering a convergence uplift. That means that the UK would not have received a penny extra in CAP funding—zero extra funding—had it not been for Scotland, but the UK Government of the time decided not to pass all the convergence money to Scotland, where it was earned. In fact, we received only just over 16 per cent of that extra money—that is, around £30 million.

The UK Government decided to divvy up the convergence money along with the rest of the CAP budget, based on historic subsidy allocations. How can that be fair? It is not what the EU intended and it means that Scotland will have the lowest per hectare payment rate of any country in the EU by 2019, as we are overtaken by the Baltic member states. The EU clearly intended that extra convergence money to go to those farmers who received the least, but that purpose was subverted by the UK Government, which held on to the money simply because it had the power to do so.

I do not need to tell you, Presiding Officer, that wrongly holding on to someone else’s property is well recognised in criminal law. In this case, the withholding of funds could be done simply because the UK, as the member state, receives the money and has complete control of how it is allocated. We could say that this is the great rural robbery.

Let me be clear that I am not looking to Wales or Northern Ireland to stump up the cash. Our case is not—I repeat, not—against farmers in England, Wales or Northern Ireland. It is directed entirely at the UK Government. It and it alone used the money for purposes for which it was not intended.

Nor is our case anything to do with the impact of Brexit. It is entirely separate from Brexit. It relates to our claim against the UK Government—not against the EU, but against the UK Treasury. It is for the UK Treasury to repatriate the moneys that Scottish farmers are due. After all, if the Treasury in London can find £1,000 million to do a deal with the Democratic Unionist Party, £160 million should be a drop in the ocean for it. However, it is certainly not a drop in the ocean for our farmers.

In my view, it is essential to sort this out before any Brexit so that, if any decisions on post-Brexit funding are based on previous allocations, Scotland benefits from the correct figure including the entire convergence funding.

The fact that the UK Government has so far failed to come up with the extra £160 million is not due to a want of trying on our part. Both my predecessor and I have had numerous exchanges with UK ministers, both in writing and in person. Back in 2013, my predecessor, Richard Lochhead, garnered welcome cross-party support for the Scottish Government’s calls for the full convergence uplift to come to Scotland. The issue was also raised with the Prime Minister at the time, David Cameron, by our very own Alex Salmond.

One concession that we were promised by the then secretary of state at the Department for Environment, Food and Rural Affairs, Owen Paterson, was a review of the UK allocation of CAP funds in 2016, but Brexit happened and that review never materialised.

Since I took office, I have called for the promised review and raised the convergence issue with David Mundell, George Eustice and Andrea Leadsom. I raised the issue again at my very first meeting with Michael Gove, at the Royal Highland Show earlier this year. In fact, there have been so many exchanges with the UK Government over the past four years about the convergence moneys that, quite frankly, it is hard to keep count. However, despite past promises by George Eustice and Andrea Leadsom to review the UK allocation of CAP funding, nothing has happened.

As I have said before, the review is important because it will highlight the vast discrepancies in payment rates per hectare north and south of the border. The review would, for example, highlight that DEFRA can afford to pay hill farmers in England around €65 per hectare whereas we can pay ours only around €10 per hectare. Even taking into account the upland sheep scheme, which is a coupled support scheme that is not used elsewhere in the UK, that brings payments to our hill farmers only up to around €35 per hectare. Although the positions are not directly comparable because the CAP is implemented differently in Wales and Northern Ireland, farmers there fare even better than English farmers, on average.

I recently raised the issue again with Michael Gove at a multilateral meeting on 25 September, and I can tell members that he agreed to a meeting to discuss the convergence issue, which I welcome. That meeting has now been arranged for 6 November, and I am hopeful that we can find a satisfactory resolution.

Helpfully, our stakeholders have also been on the case. A joint letter signed by seven of our key stakeholders was sent to Michael Gove on 11 September, and it mirrors the Scottish Government’s position on convergence. I understand that, although it was sent over a month ago, they have still not had a reply.

That is our case. I am determined to get a fairer deal for our farmers, especially those who are most disadvantaged. It is a clear matter of principle, and it is not just about repatriation of the convergence funds that the EU plainly intended for our farmers—farmers who receive the lowest payment rates per hectare in the EU—to receive. It is also about setting a baseline for future agriculture funding.

Unless the UK Government acknowledges that Scottish farmers were poorly treated in the last CAP round, how can we rely on it to treat our farmers fairly in the future? I am grateful for the strong support that members from across the chamber have given to date for the Government’s position, and I trust that I can rely on all members’ continuing support on the matter.

Thank you, minister. We now move to questions.

I refer members to my entry in the register of interests regarding my farming business, and I thank the cabinet secretary for prior sight of his statement.

Let me be clear that we on the Conservative benches still support the idea that this money should have come to Scotland. I have personally raised the issue with David Mundell, Andrea Leadsom, George Eustice and Michael Gove over the past 18 months or so since I first came to the chamber.

The cabinet secretary will perhaps be aware of the letter from Alister Jack, MP for Dumfries and Galloway, dated two days ago, asking for a review of the convergence money issue, which was signed by all Scottish Conservative MPs. That was well received by Michael Gove, and I am now very hopeful of a successful outcome to the matter. I hope that the cabinet secretary welcomes that. That is a prime example of how having more Scottish Conservative MPs is making a difference. Those MPs are working hard and have real clout in Westminster.

A lot has happened in the three and a half years since the debate on convergence took place, including Brexit. It is now far more important to look forward, but we have a cabinet secretary who is obsessed with the past, rather than looking forward. He wants power over agriculture in Holyrood but not the responsibility to make policy. What is the cabinet secretary doing to chart a way forward and to design a system of support for Scottish agriculture post-Brexit? Brexit gives us a perfect opportunity to design a better system; when are we likely to see what that will look like?

In order to be as generous as possible, it is important for me to say that I welcome the fact that the Conservatives plainly recognise that the £160 million is due to Scotland. People who are watching this statement and who are not involved in the cut and thrust of politics will want to see the Parliament continue to exert pressure on the matter, which has apparently yielded this incipient or expected commitment from Michael Gove. It is four years too late mind but, nonetheless, pressure from the Parliament has apparently delivered a change of heart by Michael Gove. If so, that is welcome.

However, if somebody takes somebody else’s money, that is wrong, and that is what has happened. Scottish hill farmers have been short-changed to the tune of around £14,000 each. If you were a hill farmer, Presiding Officer, what would you have to say about that?

To answer Peter Chapman’s questions—as I should, although they are not directly related to the topic—of course we have set out a vision for the future of Scotland’s agriculture sector. It is for the sector to provide high-quality food and to continue to steward the landscape—and for it to be given the credit for that that perhaps it does not often get.

However, how can we work out a plan until such time as we have clarity that the Brexiteers will implement the pre-EU referendum promise that, post-Brexit, the EU funding will at least be matched—that the around £500 million that Scotland has received yearly from the EU will be continued? How can we work out a plan without knowing what the budget is? Please join with us to get those assurances, which I have been seeking since the day the referendum vote took place.

I thank the cabinet secretary for the prior sight of his statement and I reiterate Scottish Labour’s backing for the cabinet secretary’s bid to have the funds repatriated to Scotland.

The cabinet secretary was right to say that the money was received by the UK to deal with the low average payment rate that Scottish farmers received. In his statement, he said that the EU wants member states to guarantee an average payment of at least €196 per hectare by 2019. He is aware that many hill farmers and crofters receive only a fraction of that amount, despite farming in some of the most challenging areas of Scotland—indeed, many of those farmers and crofters face the additional costs of working on our islands.

Will the cabinet secretary guarantee that, if he is successful, as I sincerely hope he will be, the additional funding will go to those who need it most in order to deal with their relative disadvantage in Scotland?

I thank Rhoda Grant and the Labour Party for their support, which is much appreciated. I genuinely think that the support that is exhibited in the Parliament today will help me to exert further pressure of the kind that seems to have brought about a change of approach by Mr Gove.

Incidentally, it is not enough just to have a review and a report. The report must be independent and there must be engagement between the two Governments about who does it and what the remit is and a quick timetable for resolving something that I think that all members would say has gone on for far too long. However, I genuinely welcome the support that there is today, and I pay tribute to all the stakeholders who signed the letter, which I think played a significant part in gaining the concession—albeit four years too late—that something must be done about the matter.

Let me answer Rhoda Grant’s question head on. Of course the money is intended for those who need it most in Scotland’s rural communities; therefore to those rural communities it surely must go. The money should have been coming to Scotland for the past several years, since the beginning of the seven-year period. It should have been received in 2014, 2015, 2016, 2017 and on to 2018 and 2019. Therefore, it is not easy to reconstruct what should have happened had the money not been, as I see it, misappropriated by the UK Treasury. However, I give Rhoda Grant my commitment that I will do my utmost to ensure that all the money, or as much of it as possible, goes to our rural communities who need it most and for whom it was plainly intended by the EU.

Has the cabinet secretary seen the November edition of Scottish Farming Leader? It says, on page 9:

“NFU Scotland has always been clear that Scottish policy makers must be empowered to utilise the future agricultural budget to develop policies and tools that are fitted to Scotland’s unique agricultural characteristics.”

Is the UK Government’s long-running failure on convergence moneys the irrefutable evidence of its total inability to act promptly in Scottish farmers’ interests? Does it illustrate perfectly why we must resist the Tories’ attempted policy grab post-Brexit?

There were several excellent rhetorical questions in there, and I agree with all of them. I saw the article to which the member referred.

Let me give a concrete example of why it is essential that power over agriculture is not grabbed from Scotland. If it were not for the Scottish Parliament and the Scottish Government—and I give credit to the previous Administration on this—I think that we could easily have lost the ability to have a less favoured area support scheme. I say that because my understanding is that other parts of the UK have dispensed with such a scheme; in England, they dispensed with it seven years ago. If England set Scottish hill farming payments, would there have been any over the past seven years? I think not. That is a concrete, practical illustration of the absolute need to avoid the power grab that we believe some people down in Westminster are intent on pursuing.

I declare an interest as a hill farmer.

I agree with the cabinet secretary that external convergence funding should have been given to Scotland in 2013. I therefore welcome the suggestion in today’s Daily Telegraph that an inquiry into the matter might be undertaken by DEFRA.

In a spirit of reciprocity, will the cabinet secretary consider holding an inquiry into the cost and governance of the failed Scottish CAP payments information technology system, given that the sums of £160 million to £180 million are similar in both cases but the cost to Scottish taxpayers of the IT and business change programme is greater than the loss to Scottish farmers?

That is a political point but not a question that relates directly to this subject.

It absolutely is.

It is not related to the question itself.

What does the cabinet secretary think of the Tories first breaking a promise to review the convergence uplift funding and suggesting to my colleague Ian Blackford that all the money had been spent and then starting to crunch the gears into a U-turn? In the midst of that noise and mess, when the cabinet secretary meets Michael Gove, will he ask him for an unequivocal guarantee that the review will happen?

Yes, I will, for the third time, make my direct, simple and straightforward request to Mr Gove face to face: “Will you give back to Scotland the money that is due to it?”

Kate Forbes makes an excellent point. If I make a promise to you, Presiding Officer, fail to implement it year after year and then, four years later, make the same promise and expect you to fall down with gratitude, does that not display a certain misperception of reality? That is the case with the Government down in London.

I ask for Mr Gove’s benefit whether it would not be better that he respond to the democratically elected Scottish Government on what he plans to do rather than making his decision known through The Daily Telegraph, no matter how esteemed that organ may be. It is surely a marker of a lack of respect that, having raised the point with Mr Gove again and again directly and courteously but firmly, the Parliament and I as cabinet secretary have not had the courtesy even of a phone call to indicate something that is, apparently, in the offing and is leaked by The Daily Telegraph.

Labour supports the cabinet secretary’s attempts to repatriate the convergence funds from the Scrooge-like fingers of the UK Treasury.

We all want a fair deal for our hard-pressed farmers. Does the cabinet secretary share my view that we need to get the deal sorted out immediately because we will not otherwise have a fair basis for agricultural funding post-Brexit? Has the UK Government breached EU audit requirements because of its behaviour on the issue?

I welcome the support of the Labour Party. I agree that successive UK Chancellors of the Exchequer—and not just the recent ones—have resembled Scrooge. I will move on swiftly from that.

The fact that the money has been withheld for so many years causes additional difficulties in terms of how we can safely disburse it under the exacting and demanding EU rules. In other words, not only is the delay wrong in principle, but it may well, in practice, cause significant difficulties in relation to our desire to ensure absolutely that the money goes to its intended recipients, albeit that it will do so several years late. David Stewart has raised a good point, which I am happy to look into further and revert to Parliament on in due course.

Does the cabinet secretary agree that the UK Government clearly has sufficient money to pay the £160 million, because it managed to find £1 billion for Northern Ireland?

That point is absolutely correct. As far as I am aware, the £1 billion that was paid to Northern Ireland was not paid because there was any legal or moral obligation so to do. My understanding is that it was paid in order to secure the political support of members of the DUP in the House of Commons. By contrast, that £160 million is money that the EU intended for Scotland, and for Scotland alone. The Westminster Government has chosen to do a grubby deal with £1 billion in respect of which it was under no legal obligation, and to ignore, tear up and breach an agreement and to misappropriate money that it was due to pay to part of the UK.

I thank the cabinet secretary for the advance copy of his statement. However, I am at a loss to understand why, if his intention is to secure Parliament’s support for the Government’s position, a motion has not been lodged for debate and a vote.

Scotland’s uplands may be economically marginal, but they have the potential to deliver repopulated communities and regenerated habitats and landscapes, and even to protect households from flooding. Those are public goods that even Michael Gove has championed, so if the cabinet secretary is successful in securing Scotland’s fair share of the funding, will he commit to using it to deliver public goods, which are now slipping off the table because of Scottish Government cuts to the Scottish rural development programme budget?

I do not accept that final point. Mr Ruskell knows, because we met to discuss the matter—I agreed to the meeting and met him in my office, where we went over this, as he has, I understand, subsequently acknowledged—that the reductions to the SRDP have been made because our budget has been reduced by Westminster and we have had to make consequential cuts. Of course, we are, nonetheless, maintaining substantial payments to farmers, and payments in respect of environmental matters throughout the country.

As far as a motion for debate goes, let me make it quite clear that if we need to have debate after debate after debate to get that money back for Scotland, so be it. We will bring those debates to Parliament, and eventually we will succeed.

Does the cabinet secretary recognise that the real prize in this process is to ensure that Scotland receives 16 per cent of the UK’s share of agricultural support in the future, rather than the 10 per cent that might come under the Barnett formula? Surely he recognises that with Brexit he needs to build bridges and not use such inflammatory language, which may be seen as undermining the 16 per cent level of funding for the future.

After 18 years in Parliament, during most of which Mr Rumbles has also been present, I can say that he is not unfamiliar with inflammatory language. Nonetheless, he has made a serious point that I have been arguing every day since the referendum vote to leave the EU, in which Scotland, let us not forget, voted in entirely the opposite direction—to remain in the EU. The point is that the UK must confirm that the promises that were made during the EU referendum campaign by Brexiteers—including Andrea Leadsom, George Eustice and Michael Gove—that all the EU funding, amounting to £500 million a year, would at least be matched, will be kept. When I make a promise, I do my best to deliver it. I am calling on them to do the same thing. They have not done it yet, but perhaps today’s exchange might focus their minds better—in particular, the mind of Mr Gove.

Does the cabinet secretary agree that the time for reviews has passed and that the UK Government needs, having promised two reviews on the issue in the past, to get on with delivering the £160 million that is owed to Scottish farmers and crofters?

I will answer that question in two parts. Yes, the money is due to Scotland. In 18 years in Parliament, I have not come across a more clear-cut case than this one. That money is, quite simply, due to Scottish farmers: there is no doubt. Even the Conservatives have had the good grace today to say that they recognise that that is so. I welcome that. So, part 1 of my answer is that we do not need a review. The UK Government should send the money to Mr Mackay. I want to say, “Mr Hammond, you’ve got the money, you paid far more to the Ulster Unionists, and we want our money back.”

However, part 2 of my answer—to be fair, I say that Rhoda Grant and Dave Stewart have recognised this—is that we must, for the future, recognise that the essential unfairness in the lowest rate per hectare being paid to Scottish farmers, which has been recognised by the EU, must be part of any post-Brexit negotiations. That is where the reports and review must come in, in order to seek a basis for a future deal that reflects the facts that caused the EU to give the £190 million that was intended for Scotland in the first place.

I refer members to my entry in the register of members’ interests, that I am a partner in a farming business. Let me say at the outset that I, my party and my colleagues in Westminster agree that the convergence uplift should come to Scotland, and we are actively working on that, as the cabinet secretary has accepted and as has been confirmed in the press today.

I have personally met Andrea Leadsom and have had two meetings with George Euslice—sorry, George Eustice—to press Scotland’s case in relation to the convergence uplift. [Laughter.]

To save raising his blood pressure, I will ask the cabinet secretary a simple question. The payment is due from 2014. Will the cabinet secretary confirm that the money should be paid direct to Scottish farmers without siphoning or modulation, that it should be paid under pillar 1 and not under pillar 2, and that it should not be delayed by an incompetent computer system?

No matter how frustrated and irritated I may have felt privately when meeting Andrea Leadsom, Michael Gove or George Eustice, I think that I have always managed to get their names right.

To be serious, I put it to Mr Mountain very simply that Mr Hammond could get on the phone to Mr Mackay this afternoon, say that the money is due to Scotland and ask whether he can put the cheque in the post. Mr Mackay might then ask him to send it by Bacs. After that, if the money can go directly to farmers, of course it must go to the farmers to whom it is due. If that happens, that is exactly what we will do—provided, of course, that we are able to do that within the legal regime; I have already alluded to the matters that David Stewart has quite properly raised and which no Government can ignore.

I remind Parliament that I am the parliamentary liaison officer to the cabinet secretary.

The cabinet secretary has set out the sorry and tawdry history of betrayal in relation to the funding. Does he agree that it is interesting that Mr Jack managed to issue a press release ahead of the statement, even though I wrote to all 13 Conservative MPs almost six weeks ago about the matter? Does he agree that we should all now focus on the future?

Yes—I agree with both those propositions. I will turn the screw a little bit by pointing out that the only precedent that I can think of that remotely approaches this convergence moneys issue—the £160 million that is due to Scottish farmers—is the Scottish Bus Group pensioners issue, on which a deal was reached between the UK and the Scottish Governments. It was not a good enough deal, but I must acknowledge that a deal was reached.

The money that is due to Scotland must be paid. If it is not paid, that will taint any further negotiations that take place, because there cannot be good faith in the negotiations unless the UK Government delivers to Scotland money that is plainly due to Scottish hill farmers.

On a point of order, Presiding Officer. I again declare my interest as a hill farmer.

Is it appropriate for a Scottish Government minister who is well acquainted with the use of legal terms to refer to the United Kingdom Government’s action as “robbery”, when it acted entirely within the relevant UK, European Union and Scots laws? Notwithstanding the fact that I agree with the cabinet secretary’s sentiments, is that appropriate parliamentary language?

Thank you, Mr Scott. In this case, the cabinet secretary clearly had a strongly worded statement, but it was deemed to be parliamentary.