Implications of the Outcome of the European Union Referendum (Agriculture and Fisheries)
Good morning and welcome to the 18th meeting in 2018 of the Rural Economy and Connectivity Committee. I ask everyone to ensure that their mobile phones are switched to silent. No apologies have been received.
Agenda item 1 is on the implications for agriculture and fisheries in Scotland of the United Kingdom’s departure from the European Union.
I invite members to declare any relevant interests, such as agriculture and fishing. I will start off by declaring that I am a member of an agricultural farming partnership.
I have a small registered agricultural holding.
I have a farming background in Aberdeenshire.
Thank you. The committee will receive an update from the Scottish ministers on the implications for Scotland of the UK’s departure from the EU. We will focus on the impact of Brexit on the agriculture and fisheries sectors.
I welcome Fergus Ewing, Cabinet Secretary for Rural Economy and Connectivity and Michael Russell, Minister for UK Negotiations on Scotland’s Place in Europe. They are accompanied by these Scottish Government officials: Ian Davidson, head of agriculture policy division; John Brownlee, strategy and post-EU referendum unit; and Ian Mitchell, EU strategy and migration division.
I extend a special welcome to everyone who is watching the committee on Facebook Live.
I believe that both the cabinet secretary and the minister wish to make an opening statement. I am happy for you to do so, but I ask you to limit your statements to three minutes. After that, we will have to move on because the committee has questions that it wishes to ask.
I will be Fergus’s John the Baptist.
I want to take a moment to reflect where we are in the context of Brexit: we are less than 10 months from the UK’s possible exit from the EU; we have the shape of a status quo transition but no agreement on the terms of withdrawal; and discussions—not negotiations—have started between the UK Government and the EU on the future relationship including agriculture and trade, but they continue to make no progress due to the unreality of the Government’s demands for all the perks with none of the obligations.
The UK Government is preparing a white paper on the future relationship, the contents of which we discussed in the new Brexit ministerial forum two weeks ago. However, we now understand that, although we have put work into preparing our input, that input is no longer required, because there is no date for publication—we learned that from the Financial Times. We also learned today that the white paper is apparently finished but is not being shared with the Cabinet, let alone the Scottish Government. It is really business as usual in the chaos of Brexit.
My recent engagements with stakeholders, particularly in the agriculture sector, emphasise the increasing concern about those difficulties. There are huge issues to be addressed, such as access to EU and global markets, future customs arrangements, recruiting the individuals needed to continue growth in the sector and protecting the value and reputation of Scottish produce.
I am determined to support my colleagues in any way that I can to try to gain some of the information that is required, but we know very little more than we knew before. There are signs of growing frustration right across this sector and others. I am happy to refer to those later.
I continue to discuss these matters with the UK Government when possible and to make representations to the UK Government.
We have also not yet resolved the issue of the European Union (Withdrawal) Bill. On 15 May, the Scottish Parliament, by a large majority, resolved not to give legislative approval to the bill. On that day, on behalf of the political parties involved, I wrote to David Liddington to ask him to come to Scotland to discuss the issues with members of the political parties.
I am very disappointed that it took three weeks and a reminder to elicit a response. I had a response on Friday, which I will publish today, which did not address the issue but which asked for new proposals from the Scottish Government or from other political parties. I have had to write to Mr Liddington again today—I am publishing that today and I have provided the committee with a copy of that letter, although this is the first opportunity that I have had to mention it—to say that the constitutional position is very clear: if the Scottish Parliament resolves not to grant a legislative consent motion that has been requested, the UK Government must withdraw the part of the bill for which it has requested the LCM. Therefore I would expect and hope that the UK Government will now withdraw clause 11 from the bill, as it is required to do by the constitutional settlement by which we live. If the UK Government refuses to do so, we will be in very difficult and dangerous times. I have provided a copy of that letter to you, convener, and it is being published this morning.
I will be happy to expand on those issues later.
Thank you, minister. I acknowledge that, as you came in, you gave us a copy of that letter, which I will circulate to the committee after the meeting, so that members can consider it in real time.
Good morning, everyone. Michael Russell has set out the overall situation, and I will touch on matters as they affect the rural economy. The Cabinet Secretary for Environment, Climate Change and Land Reform, Roseanna Cunningham, and I have met Department for Environment, Food and Rural Affairs ministers and Welsh ministers on four occasions since November. I regret to say that we have little or no further information.
We have repeatedly asked for information on DEFRA’s agriculture and fisheries bills. I am unable to confirm when the bills will be introduced, what they will contain or to what extent the UK Government intends to apply them to Scotland. I do not know how the bills will deal with important matters, such as protected geographic indications.
I do not know what the UK Government intends to do in respect of the repatriation of the meat levy. I met the head of the Agriculture and Horticulture Development Board yesterday to discuss the matter.
I have no idea what will happen in respect of pillar 2 payments after Brexit day—that is just next March, convener—which cover a vast array of long-term projects that need to be planned over a period of years. We have no idea what the assurances are beyond the term “farm support”, which obviously does not cover the totality of arrangements. We have no clarity about what powers are to come to Scotland. We do not know whether there will be border inspection posts.
We have learned through the press of the Armageddon option, which was apparently advice to the UK ministers themselves, believe it or not. I checked in Wikipedia to be sure that I did not mistake it, but “Armageddon” means the end of the world, so it could hardly be more serious or hyperbolic than that. It is not language that I would normally use. The particular prediction was that, in the worst scenario, there would be no food on the supermarket shelves in a matter of a couple of days—not just in Scotland but in parts of England, too. That is not the Scottish Government’s view but advice to the UK Government.
Lastly, on convergence funding, as members know, I strongly believe that, if ministers make a clear and unequivocal promise it is incumbent on them to deliver that promise. Mr Gove, who is an extremely intelligent man and one of the most courteous individuals I have ever met, promised last year that there would be a convergence review. He did that after a parliamentary statement, with support from all parties, including yours, convener, and pressure from members of Parliament, including from your party, convener.
Now it appears that that has been deferred, and is possibly not going ahead at all. I find that quite remarkable. I cannot imagine that Mr Gove is man who would not keep his word and therefore I am using this opportunity today to make a further plea: that review must surely go ahead. We have agreed that Lord Bew will lead it and there will be input from Scotland but, for reasons that I will perhaps be able to explaining later—as I think that I have exhausted my time—that is fundamental for the future of the rural economy.
Thank you, cabinet secretary.
Good morning, panel. I hear and share your frustration. The first couple of questions come under the heading “preparedness”. NFU Scotland issued a press release on 16 May in which it questioned whether the Scottish Government has
“the capacity to deliver and implement a new Scottish agricultural policy.”
It goes on to lay out in great detail what it says are the staffing arrangements, talking about DEFRA having
“filled some 650 vacancies across the Defra Group”.
I cannot comment on the accuracy of those statements, but I ask the cabinet secretary to outline what resources and staff have been made available across his portfolio—specifically, agriculture—to meet the demands of European Union exit.
First, I have an excellent team of officials supporting me in the agriculture sector, and we will come on to discuss the common agricultural policy information technology in the second part of the meeting. The officials have applied themselves with diligence, extraordinary commitment and dedication. I thank them for the work that they are doing, particularly in the local rural payments inspections division offices, all the main ones of which I have visited.
Do we have enough officials to deal with the demands of Brexit? No, we do not. I understand that there has been an agreement in respect of financial arrangements, on which, of course, Mr Mackay is the lead. DEFRA has already received substantial funds to recruit more staff, and I have learned anecdotally that it has been able to do that.
We have been allocated funds by the UK, not on a Barnettised scheme but on the assumption that only my department, essentially, will have any additional pressures—which is complete nonsense. From memory I think that the sum involved was £37.3 million. That is 2.5 per cent of the consequentials, Mr Finnie, which is way below the Barnet share. Be that as it may, I discussed it at a meeting with Mr Mackay in the past couple of weeks. Negotiating the quantum of the share of the consequentials—if you see what I mean—is in Mr Mackay’s portfolio, so the committee might wish to pursue that with him.
However, for my part, first, it is absurd that we are not getting at least a Barnettised share; secondly, every directorate of the Scottish Government is affected by Brexit in one way or another and therefore demands are placed on us in addition to running our day-to-day business; and, thirdly, for the purposes of the challenges that we face, we recognise in practice that we are looking for quality, not quantity. It is not an answer to problems to recruit a vast number of additional people; we have to have the additional people who have the required skills, as I think NFU Scotland has recognised. However, the position at the moment is that, as with everything else with the UK, the amount of resources that we will receive, which is entirely dependent on the UK Government as far as I can see, has not yet been settled.10:15
I hear what you say on both Barnett and the portfolios, but £37 million is a significant sum of money. Has the need for any additional staff or resources been addressed? That is an important issue for the Scottish Parliament.
That will be done as soon as possible, which is as soon as the matters can be resolved with the UK Government. It is not, so far as I am concerned, impairing the work that we are doing at the moment; it is primarily designed to deal with the substantial corpus of additional work that would flow in the event of Brexit going ahead. I am sometimes not sure whether it will go ahead, because of the state of utter confusion that exists around it.
The reason why the bulk of the work lies ahead is the substantial volume of secondary legislation that would have to be dealt with in addition to the normal business. The substantial answer to the question of why we need extra people is that it is for dealing with the corpus of secondary legislation, which would be very substantial indeed. I can give some figures that we have at the moment on that. In addition, once it is possible to come up with clear plans—on the assumption that Brexit will go ahead—then additional officials will of course be required, as the NFU envisages, in order to shape the post-Brexit policy after the transition period is over.
Just to confirm: there will be no additional staff and no use of that resource in advance of Brexit, in the hope that it will not go ahead.
The matter has not yet been resolved with the UK Government because, as I said, the question of negotiating from a 2.5 per cent share to a reasonable share requires to be resolved.
Does the Scottish Government have that £37.2 million?
Mr Mackay is dealing with such matters. I am not dealing with the finance matters.
Peter Chapman has a follow-up question for the cabinet secretary that the minister might be able to shed light on as well.
Just to clarify, cabinet secretary, you say that £37 million has been allocated to the Scottish Government and that no extra staff have been recruited and no extra staff will be funded.
No. That assumes a number of things that are not correct. It was announced that there will be funding, but that does not mean that the funding has arrived. It is funding that will be received.
It is quite important to understand what the staff will do and are doing, because there are additional staff already in a number of directorates. Going from the bottom up, there are additional staff and local co-ordination mechanisms in environment, agriculture, forestry, economic policy, fisheries, health, justice and safer communities. There are staff in there, but the primary focus is on the legal issue of leaving the EU and therefore having to repatriate legislation. I will be bringing forward further information on that before the recess, I think. I will have the opportunity to put in place some detail to address how that is being done, particularly in terms of the secondary legislation.
There has also been a strengthening of staff elsewhere. We have strengthened our staff in trade and investment, for example, and have a new trade and investment unit in place. We have increased our senior presence in Brussels and in London, which was essential. The strategy and constitution unit and the directorate of external affairs have also been strengthened. There is therefore a strengthening across the board and in depth as well. However, Fergus Ewing makes a very important point about the resources for that. Until three months ago, we had no idea of any additional resource for it, but we now have an indication of a Barnettisation of the resource in certain areas.
Instead of allocating a proportionate share of the overall sum—I think that it is £1.5 billion, to be expanded to £3 billion—such as 10 per cent or whatever, the UK Government has gone down the route of Barnettisation by individual departments. In my view, that will not reflect the actual cost. We estimate that there will be between 300 and 500 additional items of secondary legislation. That does not come cheap and it will require a lot of input. We will also have to scrutinise the secondary legislation that comes from Westminster, which will be substantial.
A process is under way, but it is not helped by the fact that, below the top level, we do not know any of the detail. For example, on the trade issues, what will be the customs position? We do not know, and we are less than 10 months from when the final decision has to be made.
I have a question about another part of your portfolio, cabinet secretary, as it concerns the preparedness of Marine Scotland, particularly in relation to fisheries protection. Earlier this year, I wrote to your colleague the Cabinet Secretary for Environment, Climate Change and Land Reform, Roseanna Cunningham, about marine protection vessels. They are not just for marine protected areas, but our MPAs are growing in number, with a further four as a result of the budget deals. I highlighted that the Welsh Government is building five additional vessels in Wales for fisheries protection. Do you believe that there is sufficient strength in the marine protection capability?
We have a huge coastline to cover, but Marine Scotland has been performing its functions extremely well. We are certainly very satisfied with the work that it does, but we keep under review the sufficiency and adequacy of the vessels that are available. I can write to the member on the matter. He has corresponded with Roseanna Cunningham, and I can look at that correspondence again if he feels that any matters have not been covered.
Ms Cunningham said that the matter was under review. I just wonder whether, given the initiative by the Welsh Government—of course, it has a considerably shorter coastline—and the potential additional burden, there is a pressing need for more vessels.
From the engagement that I have had with Marine Scotland’s officers in offices in ports and harbours in various parts of the country, I am extremely impressed by the work that they do. I am always a believer that quality is the important thing rather than mere quantity, and I have been struck by the knowledge that the marine protection officers have of the fishing world—of fishermen and fishing practices—and their commitment to work with the sector. I think that that is the most important thing, so I am not necessarily persuaded that we need to go out tomorrow and purchase a number of additional vessels without having checked what they would do, how much they would cost, which budget the money would come from and who would provide the extra cash. However, we keep things under review.
Good morning, panel. Minister, you mentioned the UK Brexit white paper in your opening statement. Will you tell us a little more about what you know about its current state, please?
Yes, although I have to say that you could probably get as much information from the newspapers as you will get from me, because I do not know much more than I read in the newspapers.
We first discovered that there was to be a white paper in press coverage. That was a week after we had agreed at the JMC (European Union negotiations) that there was to be a ministerial forum that would sit below the JMC(EN) and engage ministers with their counterparts in Whitehall on the issues of negotiation. Anyway, we put the lack of knowledge down to how these systems seem to operate at the present moment.
The first meeting of the ministerial forum, which took place in Edinburgh just under two weeks ago, was attended by two UK ministers, Chloe Smith and Robin Walker; by me; by Annabelle Ewing, because one of the subjects under discussion was justice and security; and by the Welsh housing minister, who is the deputy Brexit spokesperson. During that meeting, we were shown a list—unexpectedly, I have to say—and told that it was likely to be the contents list for the white paper, and we were asked, if we had views on any of the items on what was a pretty long list, to make those views known. That is not the best way to put a document together, but we thought that we would do that, and we have started work on it.
However, two days ago, we discovered from the Financial Times—and, apparently, it was confirmed by the UK Government—that the intention to publish the paper during June, which is what we were told was the intention, has been abandoned.
It seemed a strange intention anyway, because the paper was not to be for the June meeting of the European Council but was to lay out the UK Government’s position on a range of issues. If those could not be negotiated at the June Council, it seemed odd timing but, anyway, the paper will now be published at some other time. It could be the run-up to the October meeting of the European Council, which is becoming more of a focus. The June Council was the focus for progress. It is still important but, over the next few weeks, it will lessen in importance and the October Council will increase in importance.
We were also told that the paper was not yet drafted, so there was an opportunity to have input into it. However, we understand from coverage today that it is drafted but has not been shown to members of the Cabinet. That is in keeping with what we hear about a lot of documents: they exist but the Cabinet does not get to see them. I was told that I should not be too upset not to have seen the article 50 letter because the Cabinet did not see it either. Apparently, that is how things are done.
As far as we know, there is a document that may or may not end up as a white paper, but we have not seen the content of it. We will put information into the process, although I do not know what will happen to it.
So you have not had a chance to input into the paper, but hope to be able to do so. However, at the moment, you are not really sure whether you will be able to.
Well, we will go ahead in good faith and will give our views on the items on the content list, but I do not know whether it will make any difference or whether we might as well put the piece of paper in a bottle and throw it in the sea.
The cabinet secretary used the word “Armageddon”. The report in The Sunday Times uses the term “doomsday scenario” and says:
“Britain would be hit with shortages of medicine, fuel and food within a fortnight if the UK tries to leave the European Union without a deal”.
Is that officially in the white paper or is it something else that was drawn up separately?
I have no idea what is officially in the white paper, but the comment should not have been a surprise to anybody, because the separate parties that are quoted in the article have said it before. For example, I think that, in evidence to the Parliament’s Health and Sport Committee, Parkinson’s UK indicated a concern about the availability of medicines. I have heard from the pharmaceutical sector on many occasions that, because of the difficulties of leaving the European Medicines Agency, there will be issues of certification.
Sir Martin Donnelly, the former permanent secretary of the Department for International Trade, who has been to Scotland and met our standing council, has lectured on the flow of goods and has frequently pointed out that, in the massive bottleneck at Dover for food imports and exports, we have only to slow down the lorries by two minutes each and we will have a 70-mile queue. If we look at the effect of the beast from the east, when there was a shortage of milk and other produce in supermarkets, we see that the integration of the food supply chain is considerable. If we interrupt that in any way, we will have shortages. There is nothing new about that.
Minister, I am desperately trying not to interrupt you. I have a long list of questions that everyone wants to ask, so I would appreciate it if members could keep their questions, and you, cabinet secretary and minister, could keep your answers, as brief as possible.
My question is on policy frameworks for areas that are within the committee’s remit, such as agricultural support, animal health and welfare, food and feed safety, and hygiene laws. What are the priorities for Scotland in how those frameworks are negotiated and what the outcome is?
On how the frameworks are negotiated, we have had what are called deep dives on all those subjects, as we have had on all the 24 subjects with broad agreement that are left out of the list of 111. Those have been undertaken according to a set of priorities and principles that we published, which included ensuring that there was co-operation between the countries and that the devolution settlement was respected, as well as a range of other things that are in the public domain.
We could easily establish those frameworks tomorrow and would be happy to do so on the basis of agreement, not imposition. The delay to the matter is the delay to the European Union (Withdrawal) Bill. That is a Westminster issue. The timetable for it is set by Westminster, not us. If the UK Government gets its bill through and it wishes to sit down and discuss with us getting those frameworks in place, that will be fine. If it imposes those frameworks upon us within a rigid legislative structure, that will be harder to do because our freedom of action will be considerably less. However, our priority in setting the frameworks up is to make them effective and ensure that we all bring our concerns to the table and get work done on them.10:30
The policy outcomes will be a matter for the cabinet secretaries who have the policy portfolios; that is not a matter for me. The work has been done to ensure that things work. The deep dive process went from proof of concept—where we asked whether we could make this work—to an agreement that, provided that we did it on the basis of the four countries working together and equally, it could work.
I am sorry, convener—I know that you want to press on, but there is one issue that needs to be understood in this context. If there is a settlement of the Northern Ireland situation that leads to complete regulatory alignment between Northern Ireland and the Republic of Ireland, there will be huge implications for the agriculture framework, for example, because we would be endeavouring to set up a framework with Northern Ireland, as part of the relationship, when Northern Ireland was already in a relationship of full alignment with the EU. Therefore, unless the relationship with the other countries was one of full alignment, there would be a very strange process indeed. We are completely unable to get an answer to that conundrum from the UK Government—I have raised it on a number of occasions. Until there is resolution of the Northern Ireland situation, it is impossible to see how the frameworks would operate.
Notwithstanding all that, it is important to stress that in meetings between officials, a huge amount of work has been done in good faith on the areas that Kate Forbes mentioned and on other areas, in an attempt to be constructive and to explore the possibilities for frameworks in as many areas as we can co-operate on. However, the process has been hampered by a lack of clarity on the high-level information, as Michael Russell said.
I think that I am correct in saying that that relates to legislative frameworks. When it comes to the non-legislative frameworks that might need to be developed and agreed, what will the process be and how will you ensure that we can benefit from divergence, where that is required?
Because non-legislative frameworks would not be governed in the same way, I think that the process would operate in a better fashion. Non-legislative frameworks already exist in a number of areas. For example, there are arrangements on marine issues, which work pretty well on the basis of agreement. The non-legislative frameworks, which are the majority, should not cause huge concern here; it is the legislative frameworks and the straitjacket that might be put on for a long period that are problematic.
Of course, anything can become a legislative framework. It is important to recognise that, because one of the points of issue is the refusal to have a definitive list of issues on which there is a section 30 mechanism for approval. The UK Government is saying, “There is a list, and we think that that is it, but tomorrow we might discover something behind the sofa that we want to bring in, and we would just do that and there would be nothing that you could do about it.” That technically applies to areas that are non-legislative; they could become legislative without our being able to do anything about it.
I want to ask about Scottish agricultural policy after we leave the European Union and the common agricultural policy. Fergus Ewing has argued that the lack of clarity from the UK Government on policy, funding, labour availability and trade agreements makes the formulation of a meaningful strategy impossible.
However, it is nearly two years since the vote to leave the EU. Cabinet secretary, you have known for nearly two years that it would be your responsibility to design the new, bespoke system of agricultural support for Scotland. Have you done nothing in that regard for the past two years, because you think that it is not possible? Should you have been doing something over the past two years? If you have been doing something, as I hope is the case, when will we know what your plans are?
We covered this territory in my statement to the chamber yesterday. Let me begin by saying, with respect, that I do not accept your various premises. We have been carrying out a great deal of work, much of which is directed at looking at post-Brexit approaches.
Yesterday, I mentioned two pieces of work, in particular, that we have done. First, we appointed agriculture champions; I announced their final report yesterday, and I have it here. Their recommendations are excellent and we will respond to them in detail in due course. The agriculture champions’ work was shaped around providing advice on the future of agriculture, not dealing with the consequences of Brexit, although I think that the recommendations apply across the board. Their work is in alignment with my thoughts, which I have set out. I know that Mr Rumbles says that we have not done anything but, with respect, I do not accept that premise.
We have made it absolutely clear that in Scotland, we think that farmers perform twin roles. They are producers of food and they are custodians of the environment. Increasingly, I am getting signals from people who are not involved in politics at all that they are alarmed about the direction that Mr Gove is taking because there does not seem to be due emphasis on the role of farmers as producers of food.
That is a particular concern now because there is increasing concern about the security of supply of food, particularly with the types of possible scenarios—the Armageddon scenario and so on. If there are interruptions to or breakages of supplies because trade agreements are breached, or because most-favoured nation status applies to the setting of tariffs and the tariffs could become enormous without that status, there could be a number of extremely serious challenges to food security.
I have set out in principle, very clearly, that the Scottish Government believes that the farmers have those twin roles. Chapter 2 of the agriculture champions’ final report sets out a large number of recommendations. We will respond in detail in due course.
There is a particular need to put an emphasis on new entrants. We need to bring more people, especially young people, into farming. I am pleased that in Scotland we have done more on that, through financial support, than has been done elsewhere in the UK.
The agriculture champions have set out a large number of serious recommendations. My view is that it is always correct for ministers not to set the agenda without first having a detailed engagement with stakeholders. We have done that and expert stakeholders have set out their views.
Of course, the other response to Mr Rumbles is that, at the behest of the Parliament—indeed, in terms of the amendment that he himself drafted—we appointed a National Council of Rural Advisers. He lodged that amendment, Parliament agreed to it, and we appointed the NCRA. The NCRA is producing a discussion paper shortly and it will produce its final report in a few months. It is absolutely correct that we listen to people—that we listen to the experts and come up with a policy thereafter.
Lastly, this is a complex topic, convener, and no doubt we will explore other aspects of it—
Cabinet secretary, I am sorry, but—
It is a very complex topic—
I know that it is a very complex topic, but six members of the committee want to ask questions about it. I am sure that you will be able to work in your point in your answer to one of those six people when they ask their questions. With the greatest respect, I would like to go back to Mike Rumbles so that he can ask the next part of his question and then I will bring in other members of the committee.
The cabinet secretary is quite right—it was my amendment that the Parliament voted on unanimously. It called for the Government to get “relevant stakeholders” round a table to produce advice for the Government so that it could produce a plan for the future.
Relevant stakeholders, in my view—I assumed that it was the cabinet secretary’s view as well—are not just the producers, but the consumer organisations and the environmental organisations. In my discussions with those organisations, they tell me that they have not had that engagement with you. You have consulted the agriculture champions and the advisers on the NCRA, but they are all from the producer organisations. If we are going to get a successful new system for Scotland, with buy-in from consumers, environmental organisations and producers, all those stakeholders need to get round the table with you to produce that plan so that we can engage with the rest of the UK. How can you go into negotiations with the rest of the UK on frameworks when you have not come up with a plan yourself?
I am very sorry, but that premise is simply wrong. Mr Rumbles says that I have not engaged with a variety of stakeholders such as consumers and environmental organisations; I have had a range of engagement over a period as cabinet secretary. The record of that engagement is there—I can write to Mr Rumbles about that if this is any more than a debating point. I assure Mr Rumbles that it is important to me to engage with a range of stakeholders and I do so, day and daily. I have been involved in a number of major events apart from engaging with the NCRA, so I do not accept that premise.
I ran a business, as other members here have done, before coming to Parliament, and I spent 20 years doing so. To run a business, you need to have a plan, you need certainty about what you are aiming to achieve in terms of income and costs, and you need to be sure that you can retain your staff. The difficulty that we have at the moment is that we do not know whether we are going to be in the single market or in the customs union, whether there will be tariff-free trade, or whether people from Poland and the rest of the EU will continue to be made welcome in Scotland—although we are very clear about that—so we do not know how much our costs are going to go up or how much our income is going to go down, and we do not know whether our staff will be around for much longer. Those three matters are pillars of running a business, and I am afraid that unless or until the high-level detail of a Brexit plan is solved, the question remains: how can you have a business plan with no figures? Can anyone from the Opposition parties explain that to me? I have been waiting for a while for an explanation.
I ask everyone to remain focused on and targeted in answering the questions, and I want the questions to be short. I am finding it difficult, because we are a long way through this session and we are not getting through the questions that everyone has the right to get answers to.
I am astonished. We are hearing the same story again, with a wringing of hands. It is far too little, far too late. You said that farmers are alarmed by what Mr Gove is saying, cabinet secretary. I can tell you that farmers are alarmed by the lack of anything that you are saying. I do not accept that you have no clarity. I know that you do not have clarity on everything, and I accept that lots of difficult discussions need to be had, but the one part that you can play is to design a system of support for Scottish agriculture that suits Scottish agriculture. Mr Gove has been quite clear that that responsibility lies at your door and at the door of the Scottish Government—you are the man responsible for producing that document. When is that document going to appear in order to give farmers some security in respect of what we are doing post Brexit with support mechanisms for Scottish agriculture?
I fully accept that farmers and land managers are seeking certainty and clarity, but I respectfully point out that it is simply not possible to get that until we know whether there is to be a Brexit and, if so, whether we will be in the single market or will remain in the customs union, whether our lambs will still be available for export to Europe and whether the people who work in berry picking will still be able to do those jobs. It is simply not possible to devise a plan until the high-level matters are resolved. I fully accept that, at such time as those matters are resolved, it then becomes my responsibility, but it would be helpful if all members across all parties could reaffirm their support for the convergence review, because that will have a major influence on the amount of money available—
Cabinet secretary, we will come on to the convergence review in due course, so you will get your chance to comment on that.
It is all relevant, convener.
I am sorry, cabinet secretary, but you always appear to have an answer when I make a polite suggestion to you. I want to move on to the next question, which is from Colin Smyth.
The cabinet secretary must accept that there is frustration among Scotland’s farmers, not just about the challenges and the lack of information coming from the UK Government but about what they perceive to be the failure of the Scottish Government to set out, at the very least, the core principles behind your vision for the future of Scottish agriculture and what the support mechanism should look like. The NFUS has set out such principles in “Steps To Change: A New Agricultural Policy For Scotland”, but you are saying that it is impossible to do that because you do not have the full details that are required for a business plan. Why is the NFUS able to do it? Why are other organisations, such as Scottish Environment LINK, able to set out the core principles of what future support for Scottish agriculture should look like? When will you set out those core principles, at the very least?
I see from the timeline that you will make a further statement in Parliament on Tuesday, on the back of the paper from the national council of rural advisers. Will that be a statement on the detailed report from the NCRA? What exactly is your timeline for setting out the basic principles behind what future support should look like and for making that case to the UK Government?
With respect, I set out clear principles earlier and made it clear that, in Scotland, continued support is necessary for food production, for example. That was not clearly enunciated by Mr Gove in his paper, which is very alarming. I do not accept that we have not set out clear principles.10:45
We now have the benefit of an excellent report from the agriculture champions—members might wish to study it—which points the way ahead in many respects. It is important to listen to experts who are not involved in the political realm, which is exactly what we shall do.
I want to be able to offer the best possible array of support to rural Scotland. Next year, Scotland is expected to receive a direct payment of €128 per hectare in financial support. The UK as a whole will receive an average of €225 per hectare and Italy will receive €363 per hectare so, next year, Scotland will receive the lowest rate in the EU.
I assume that all members will want to get the best deal for Scotland. That is one of the two reasons why the convergence review will directly impact on how we are able to deliver for Scottish farmers. What size will the cake be? Some members might just want half a cake, but I do not agree with that and I will argue for the whole cake.
The convergence review was promised by Mr Gove. It would be heartening if the convener and other members were to confirm that the committee will call on Mr Gove to obtemper his promise and set up the review as agreed last year. That directly impacts on the answers to Mr Rumbles’s and Mr Smyth’s questions. If we do not have that review, we will be at the bottom of the pile. We receive the lowest level of support in the EU and I, for one, do not think that that is acceptable.
Cabinet secretary, that is twice that you have mentioned the convergence review, but I want to focus on other questions. I have a question on the agriculture champions report, which you mentioned and which I have read in some detail. Please turn to recommendation 17, which says:
“It must be accepted that some farm businesses won’t survive even if current policies were to remain.”
What planning have you done to help the farm businesses that will not survive in their current format to move on after Brexit and engage in other businesses if farming is not for them?
We will consider all aspects of the report’s recommendations and respond formally in due course.
On the question that the convener asked, we provide a range of support, which we focus on the farmers who need it most. Alone in the UK, the Scottish Government has continued with the less favoured area support scheme. As members will know, 85 per cent of Scottish land is considered less favoured under LFASS. That is precisely why we wish to maintain the scheme and why, when it was established last year that we could maintain it at 100 per cent, we altered our plans, which had been based on moving to 80 per cent, in order to return to 100 per cent. It is also why we provide a range of assistance, such as the crofting agricultural grant scheme, support for new entrants from Scotland’s Rural College and other existing support that is targeted at those who need it most.
One of the recommendations in the agriculture champions’ report, which I am in favour of in principle, is that we should continue with the cap on the maximum support that will be available and direct the money that would be saved to areas of greater need. If we are being candid and truthful, we would accept that Governments are not responsible for—and cannot accept implied responsibility for—the survival of every single business. However, this Government cannot be readily faulted on its range of options and support, especially in the Highlands and southern uplands and in areas where the land quality is poor and it is therefore more difficult to make a substantial profit and a living.
I accept your point that that has been a help in the past, but I was looking for answers about potential help in the future. I guess that I will have to wait for them.
I was happy to answer that.
Cabinet secretary, your views and those of your colleague, Mr Russell, on Brexit are pretty well known in the Scottish Parliament, and your views on the Conservative Government at Westminster are no great secret to any of us, either. Notwithstanding your personal political views on either of those matters, do you feel a sense of responsibility and duty as the cabinet secretary for the rural economy in Scotland to now develop a policy on a post-CAP subsidy system for Scotland? If it is not your job to do that, whose job is it? If now is not the time to do that, when is the time?
In order to provide a clear policy on a system of financial support, a budget is needed. If there is no budget, it is not possible to do anything other than theorise on a number of scenarios. There will be different plans if the budget is £25, £50, £100, £1,000 or £1 million. That is a statement of the obvious.
Of course we are developing a policy. That is why we have reached out to the NCRA and why we have implemented the spirit and the letter of the motion that was passed in Parliament. Parliament asked us to do that. That is the process for developing policy. That process does not just involve my sitting in St Andrew’s house with a blank piece of paper in front of me; it involves reaching out to stakeholders and getting their views. We are doing that, and I welcome that, but I am surprised that there does not seem to be universal accord on that.
I can confirm that we are in the process of developing our approach. I accept, of course, that once—or if—we get to a solution on Brexit, at that point my responsibility will kick in to get on with it, and I assure members that that is what will happen.
With the greatest respect, cabinet secretary—
Hold on. Jamie Greene can come in with a quick follow-up question before John Mason comes in. I know that people are finding some of the discussion frustrating and that they want to make comments, but it is fair and respectful to listen to the answers and then ask questions. It is also fair and respectful to people who are answering the questions to go through the chair and address questions to me, and to try to listen to me as I manage the meeting. I am not trying to shape the meeting; I am trying to give everyone the opportunity to come in, and I am finding that quite difficult at the moment. I ask the cabinet secretary to give his answers through the chair.
With the greatest respect, cabinet secretary, people will be watching this evidence session with a huge sense of frustration. In response to specific questions about when a policy will be produced and what it might look like, all that we are met with from you are repeated answers of uncertainty. It is said that there are too many unknowns at the moment. Surely you have a wonderful team of civil servants, some of whom are sitting around the table next to you. Is work taking place in your directorate to develop the potential shape of those policies and frameworks, notwithstanding the financial settlement at the end of the process? Your answering questions by saying that there are too many unknowns is simply not good enough for Scottish farmers.
Of course work of that nature is going on and officials are working on potential options but, until we have clarity, it is not possible to come forward with a clear plan. The argument is circular. I have been asked the same question for several weeks, and I very much look forward to an opportunity for me to deliver that clarity. However, I am determined to continue to provide support to our hill farmers, our livestock sector, our arable farmers, our land managers, our forestry sector and the environmental schemes.
I will put the matter to members in a straightforward way. If someone is planning now to have a 40-hectare forestry plantation, it is not at all clear where the funding will come from after next March. What sort of plan can I come forward with other than one that says, “Well, we’ll give you the money if it’s available.”?
If you were the investor, would you then go ahead with your plans? Would you spend the money on advisers if a Government said “Well, go ahead with the plan, but we may not actually have the money to pay for it.”? That is the situation that we are in at the moment—notwithstanding the limited assurance that we have in relation to farm support. From the point of view of anybody who has run a business, that position is a complete non-starter. That is not the way that investment works; it works with clarity and certainty. That is needed first, then the business plan follows.
I will continue the same line of questioning. Cabinet secretary, are you saying that it is not possible to set out policies quite distinctly from the money and say “These are my priorities A, B, C and D, and it doesn’t matter whether we get £60 or €60 a hectare or £120, £300 or whatever it is—we’ll just slot that in later.”? Alternatively, are you saying that the amount of money that we get is crucial and that the priorities might vary, or the relationship between the priorities might vary, depending on the amount of money that we have?
Without certainty, or something very close to it, about the amount of funding available in total—broadly speaking, it is £500 million per annum for rural development as a whole, including agriculture—it is simply not possible to produce a plan that has any real substance or meaning to it. The paper that Mr Gove has put forward is an interesting one, but it is not clear what it will mean for any farmer. Although it is an interesting read, it does not actually provide a plan. We could not call it a plan; it is a series of ideas or proposals. Similarly, I thought that the NFU’s proposals were a good read, covered a lot of good ground and offered good ideas. However, a farmer reading it would think “Well, that’s all very well, but what about me?” For a farmer getting, say, £10,000 support, neither of those documents can possibly give any real clarity from the point of view of his running a farming business.
I agree that the public good should play a part and I also agree that paying people simply for the amount of land that they hold does not actually incentivise either productivity or environmental best practice. It is quite easy to reach agreement on what is wrong with the current system and it is quite easy to set out a series of general statements. We have done that—I can point to various documents where we have done that very clearly—but a plan is entirely different. A plan provides clarity and certainty to individual people who are directly affected and whose families and businesses are directly affected.
However, having said all that, I can assure this committee, as I said in answer to Mr Greene a moment ago, that my officials are working with me on those general policy matters. I can also assure those who might be listening to this discussion that we are working very hard in this preparatory stage in order to ensure that, when we have sufficient clarity, we will be able to move forward swiftly on post-Brexit options.
Cabinet secretary, how are you going to tell farmers what they will get if you do not know what Scotland will get? If you promise something now in a plan that you cannot deliver, what will farmers think of you then?
They will think that I should resign.
And I probably should. That is why it is really a bit silly for members to ask that we produce a plan with figures when there are none. I have not come across anything in 18 years in the Parliament that seems to me to be such an absurd proposition, but there we are.
Cabinet secretary, yesterday in the chamber you accused the Conservatives of playing political games. I suggest that you are doing exactly that and that you want Brexit to fail so that you can blame Westminster again. I am reflecting the feeling in the countryside that this Scottish National Party Government is prepared to sacrifice agriculture on the altar of a second independence referendum. [Interruption.]
Hold on, please, everyone. I deliberately asked for questions, but Mr Chapman made a statement. I am afraid that, given that he made that statement, I am going to move straight to the next question, which is from Mr Rumbles.
It is about what the frustration generally comes from. None of us wanted to leave the European Union, but we are leaving. We have been constrained by the rules of the EU, and we now have an opportunity to design a system for Scotland, which I had thought the minister would be the first to grasp. Although farmers accept that you cannot tell them explicitly how much they would get for what, what they—and we—want to hear is your vision for the future of farm support in Scotland.11:00
I fully understand that there is a great deal of frustration in the farming community at the moment. I spend a lot of time visiting farms, as often as the parliamentary process permits me. I speak to farmers and I listen to what they have to say, and I attend various important events and meetings, as is right and proper. Therefore, I understand their frustration.
Also, incidentally, I am acutely aware of the difficulties that farmers have faced over the past winter. It was a very long winter with extended bad weather—snow, rain and rain on snow—fallen stock and huge numbers of lambs lost through hypothermia. As well as the financial effects of that, the emotional and human effects are very substantial. That is why we responded with the fallen stock scheme.
Cabinet secretary, I am going to stop you there, because that is so far off the question. The committee has asked the question on numerous occasions—I have recorded seven or eight times when a similar question has been asked and we have had a similar answer. We are now on to a fallen stock scheme, which is not to do with the original question. I will move on from that question, which seems—in good agricultural terms—to be stuck in a rut. Kate Forbes has the next question.
I have a few questions about the UK agricultural and fisheries bills, starting with fisheries. Have detailed negotiations on the frameworks of fisheries management started yet, and what input have you had to the UK bill on fisheries?
As I said at the outset, I have had four meetings with UK ministers since November and I had several before that. We have asked for clarity on the fisheries bill but we have not been given it, which is disappointing. We have no clarity at all about what the UK Government is proposing. We have set out our clear view that fisheries is a devolved matter, that it should remain fully devolved and that power in respect of all matters that currently rest with the EU should, therefore, come to Scotland so that we can exercise them here.
That said, I have a good and workmanlike relationship with George Eustice, having worked with him at the December negotiations for the past two years, and I think that there are common elements. We believe that the principles of a fisheries policy should be that we should not exceed a maximum sustainable yield—we do not want to overfish. We want to stop the discard practice that so concerns the public and which is also an enormous waste of resource, we want a thriving and successful fishing community, and we want Scotland to exit the common fisheries policy, which has good aims but has not really worked out in practice and has been disastrous in many respects.
I stress that there is commonality in some areas. However, the principal concern lies with the recent revelation that, far from Brexit leading to the “sea of opportunity” on the day after exit, there is now going to be a prolonged period during which we will not only be in the CFP but will have no voice at the table. We will be locked out of the negotiations for one of the years, as I understand it—Mr Russell can correct me if I am wrong—which really is the worst possible scenario to be in.
The minister is itching to get in.
I thought that I should earn a crust.
Can I cite a previous answer?
Yes—and then I will give the minister the chance to answer.
The minister has previously said that the current arrangements for fisheries essentially operate collaboratively and that it is of concern that we do not know whether the fisheries bill will include a new set of legislative frameworks or seek to continue in that informal way.
Yes. It has been very difficult to get a handle on when bills are due to appear. The immigration bill, which will impact on some of the issues that we are discussing, was first due in 2017, then it was due to be published at Easter, and now it might be published in the autumn. We expected the fisheries and agriculture bills at the beginning of the year, but we have not seen them. We have also still not seen the customs bill.
In the context of our discussion this morning, it is also fair to say that the UK Government’s overall vision for Brexit, which we presume is to be articulated in the white paper, has not appeared yet. The committee might want to note that. However, from intentions for the white paper, it looks as though the UK Government will make a distinction between agricultural food and fisheries products, which fits into the goods and economic partnership theme, alongside an item that sits on its own called “fishing opportunities”, which we understand to mean access to waters.
We are seeing a twin-track approach being taken in legislation on a framework for fisheries, much of which has operated on a voluntary basis up to now. Other issues will be taken care of in different ways, including by the trading relationship, which will be very important. For my constituents, the key issue is getting goods to market. We do not know what the customs arrangements will be, so it is impossible to say how that will happen. There is also the vexed question of access to waters.
Have detailed negotiations on the frameworks for agricultural support started yet? I ask that particularly in the light of there being a disproportionately high number of less favoured areas in Scotland?
The negotiating timetable is not clear. It features as an item that will be considered by the ministerial forum—the item that tries to relate the interests of the devolved nations with the formal process of negotiation. I would expect the cabinet secretary to be engaged with me in the ministerial forum in discussing that in July or August, in respect of input to the negotiating process. However, we do not have a date for that; we do not have sequencing for the negotiations. We are unlikely to see that sequencing until we know what happens at the June council—although, of course, the June council might not produce a result.
It really is important to stress the uncertainty. I am having to answer every question by saying, “This may happen or that may happen”, responsibility for which lies firmly at the door of the UK Government.
Okay. The next question is from Jamie Greene.
The cabinet secretary mentioned the situation around the report from Michael Gove called “Health and Harmony: the future for food, farming and the environment in a Green Brexit”. What analysis have you done of that document? Are elements of it suitable for or relevant to Scotland? Is your policy direction similar to or different from the contents of the report?
The report was an interesting read—I will say that for it. Where we differ is that my vision for the future of rural Scotland is of our farmers producing high-quality food, continuing to look after the landscape and, in so doing, improving their environmental practice in respect of, for example, soil quality and drainage. We also seek to improve productivity and efficiency and to bring more young people into the countryside.
It seems to me—this is my view, but it is also the view of many stakeholders to whom I have spoken recently—that Mr Gove’s focus is more on environmental matters. He seems to be proposing that financial support for food production should either cease or be massively curtailed. That would be a grave problem, which I say having this week announced financial support for ABP Food Group—the meat processor in Perth—which supports 1,600 farmers.
In our livestock sector, cattle numbers have been going down—as the convener will know—for about 30 years, as have sheep numbers. If that decline is not arrested, there will come a point at which the livestock sector’s ability to support the processing sector—abattoirs and so on—will be called into question. We have already seen abattoirs with lower throughputs closing in Orkney, Dunblane and elsewhere. Incidentally, I note the practical matter that abattoirs are highly dependent on EU labour: the figure is over 90 per cent, I think.
I do not wish to be unfair to Mr Gove; he is an extremely courteous man and we have had good engagement in courteous, interesting and relevant exchanges. However, the difference between us is, as I understand it, that I am concerned that we also need to focus on food production. The public conceive of farmers as producing food, so as long as farmers continue to do that and to do it well, the public will be happy with continuing financial support for farmers. I think that were that conception to cease, which seems to be the direction of travel down south, that might change.
Thank you for your feedback on the document. I am sure that your comments will be noted.
It is expected that we will, after the UK leaves the EU in March 2019, move into an implementation or transition period, the length of which is still to be determined. The UK Government has given a commitment to farmers in England that there will be a transition from the current status quo of CAP to the new system of agriculture support, whatever it might be. Have you given thought to the transition period in Scotland and a move to a new system—whatever it will be: we have laboured that point tremendously this morning—and to what will happen in 10 months in relation to payments until 2022 and beyond?
We have given a great deal of thought to that. I assure members that we have considered the matter in detail, as is right. There are two stages: the stage immediately after Brexit day until the end of the transition, and the full monty Brexit—or whatever we want to call it—after the transition period ends.
My view is that, in principle, it is desirable that during the transition—in other words, the period prior to adoption of a post-Brexit new rural policy for Scotland—we have as much stability and certainty as possible. We will try to reintroduce stability and certainty. That key objective is the correct one to set in establishing a transition policy. I say that because there is so much uncertainty at the moment. If it is possible, in a transition scheme, to dispel that uncertainty as far as we can within our powers, it is correct that we do so—and that we do so relatively soon.
Is it your vision that the transition period should move us gently to the situation beyond, by trialling all the systems that will be in place post-transition and by enabling and encouraging businesses to move to the situation in which they will find themselves after the transition period?
I agree with the general thrust of that. The champions recommended a transition period of three to five years, and then a 10 to 15-year strategy. They said that change is essential: I think that they are correct. We need a longer transition period than the UK Government has proposed, because it will take longer than that, first to shape, design and consult on a new scheme and then to prepare and implement it. Of course, we will need IT systems to do some of that: I am in a good position to know that such things need to be done well.
There must be change in the post-Brexit policy, and it is essential that there is sufficient time to prepare for that change. Over that period, we should trial new policies. Whether we do so on a pilot or demonstration basis, or on a universal basis is a matter for debate, but we should use the transition to bring stability and certainty and to try out ideas—for example, on new entrants, given that there is, I think, a desire across the political parties to see what more we can do to bring new blood into farming and into rural Scotland.
Given that nothing has been agreed yet and we are heading towards Brexit day, do you have concerns about the impact of Brexit on products such as Scotch whisky, Scottish farmed salmon, Orkney cheddar and Stornoway black pudding? Will such products continue to be protected under the EU protected food name scheme?11:15
Protected geographical indications are a very important issue—one of many that are unresolved in the negotiating process—that will have to be resolved in the next six months. The EU27’s concern is that the whole European programme of protected geographical indications could be undermined, because equivalences could be drawn, so they are keen to see the indications for products from these islands established in law. We support any action to make sure that they are enshrined in law that would run parallel with or keep pace with European law, so that they form a bulwark of preservation rather than being undermined. That could happen very quickly; the moment that Scotch whisky could be imitated elsewhere, people would get away with it. The issue is central among our concerns, but there are—as I said—no proposals from the UK Government, as yet.
The Scotch whisky industry and others have called for the establishment of a formal permanent trade policy stakeholder advisory network to advise the Government on trade negotiations. It would comprise experts on trade policy led by the UK Government Department for International Trade and involving other UK departments and devolved Administrations. Do you support that call? If so, what are you doing to make it happen, so that the sector is involved heavily in negotiation of those vital trade deals?
What has been called for does not go nearly far enough. I have supported it as far as it goes, and had a conversation about it with the Scotch Whisky Association—in this room, I think—not long ago. It is not just about our making comments on the negotiations. For the Canadian treaty, the EU insisted that the Canadian provinces were involved in the negotiation because they would have to deliver within their competences on some issues. We will have to deliver within our competences on some trading treaty issues, so we should be partners in the negotiation and implementation of treaties. That is the right way to do it, which would be much more productive in the context of the single market and the customs union, which the Scotch Whisky Association has not yet come to.
I will try to be very focused in this question, which is about the two halves of the fishing industry—catching and processing. If the industry was pro-rated to the UK, it would probably be an £8.5 billion industry. For Scotland, it is a bit over £1 billion, so it is important economically and extremely important locally. With regard to reciprocal access to fishing waters, about which UK ministers have visited the Dutch and the Danes to assure them that it will all be okay after Brexit day, what information do you have about access to 100 per cent of the fishing opportunities—the “sea of opportunity” that I was happy to bring to Parliament to debate—and whether negotiations are progressing in the way that was promised in the 2017 UK general election to my constituents and the fish catchers?
That was a very short question. Who would like to have a go at that?
Sadly, we have had no clarity on that. I heard the Prime Minister say that the aim is to “take control”, which is absolutely correct. However, we do not know quite what that means. We have asked to be involved in the negotiations, at least as a partner—particularly because Scotland catches the majority of the fish by value—but we have not had agreement to that proposal. On several occasions, I have asked Mr Eustice and Mr Gove, and Mrs Leadsom before Mr Gove’s appointment, for confirmation that access rights will not be traded away permanently as part of quid pro quo in an EU deal, perhaps over access to the single market. Sadly, I have had no answer to that. Obviously, we need to press on the issue: I do not need to tell Mr Stevenson that our fishermen in the offshore sector voted for Brexit in the belief that they would have access not to 40 per cent but to all of the fish in the 200-mile limit.
We can disaggregate taking control into two parts, one of which relates to who catches. Have you had any indication that, whoever is doing the catching, we will have the responsibility for determining the regime within which they operate? At the moment, the jurisdiction from which a vessel has its licence is responsible for how it catches. My constituents are particularly frustrated when we close a fishing area, such as the hole off Peterhead where spawning takes place, which stops our fishermen but it does not stop foreigners. Will that change?
Those are absolutely vital matters, as Mr Stevenson says. We believe that those powers should be vested in Scotland. We have excellent officials who are well respected across Europe and who are playing a major part, working with UK officials, but at the moment we do not have sufficient powers. That is because the pre-Brexit concordat that has been agreed has not been signed off by the UK Government. That is important, because it means that we cannot provide the fishermen with the decisions that they are looking for in respect of licences and quota allocation.
If there is a greater catching opportunity post-Brexit, as I assume there must be, that will allow us more opportunities—for example, to assign some of the additional catch as quotas to enable new entrants to come in. That is an opportunity that I have, I say to be fair, discussed with Mr Eustice. There is commonality on there being an opportunity that we should grasp. However, we have not yet agreed the pre-Brexit passage of the concordat, which I am afraid is restricting what we can do to assist Mr Stevenson’s constituents on day-to-day matters about licences and quotas.
I will move on to processing, because the convener is anxious that we make progress. Fishing gets 10 minutes, but agriculture got more than an hour.
I note that 24 languages are spoken in Peterhead academy and that 20 languages are spoken in Fraserburgh academy. We know that staff in our processing industry, which is larger than the catching industry, is a significant issue. Has the minister had any assurances in that regard?
I will just roll that up with the other half of my question. Given that fresh fish, in particular shellfish, are absolutely critical in getting the high value that can be realised in markets such as Boulogne-sur-Mer and elsewhere, have we had assurances of friction-free access for that important part of our food and drink industry?
I will take the latter part of the question first. Mr Stevenson is absolutely right that shellfish needs to get to market. Plainly, it is transported in conditions that keep it as fresh as possible. Therefore, the prospect of the UK becoming a third country and there being border inspection posts brings the concomitant risk of substantial delay. Delay is anathema for the shellfish industry, which exports to countries including Spain in huge quantities from ports in Mallaig and the northern isles. That is a very practical matter.
On the workforce, having visited Peterhead and Fraserburgh on many occasions and having spoken to the Peterhead harbour trustees at the recent event called “Skipper Expo International Aberdeen 2018”, which I formally opened, I am acutely aware of the importance of EU labour in the onshore and offshore sectors. I am also aware that the continuation of funding from the European maritime and fisheries fund is important for ports and harbours and for processors throughout our country. Although we know that there is to be a shared prosperity fund, we have no idea what it will be and we do not know whether it will cover the more than €100 million that we have received in the preceding period in EMFF assistance, which has been an enormous help to the sector. I am afraid to say that there are lingering uncertainties that affect the fishing sector as much as the farming sector.
I note for the record that, yesterday morning at 10 o’clock, the committee was sent “Economic Impacts of Scenarios for Scottish and UK Seafood Industries Post EU Exit”, which is summarised in a policy brief of 10 pages, with supporting documents that run to 101 pages. That was quite late for that to be received, just before a committee meeting. Stewart Stevenson has asked for more time to be given to fisheries, and I am sure that we will be able to find time for that in another meeting.
I thank the cabinet secretary and the minister for their time. I also thank Ian Davidson, Ian Mitchell and John Brownlee for attending.
I suspend the meeting for no more than five minutes to allow a change of witnesses.11:25 Meeting suspended.
11:31 On resuming—
Agenda item 2 is an update on agriculture. Given that we have had a brief suspension, I invite members to declare any relevant interests. I declare a registered interest as a partner in an agricultural partnership.
I own a small registered agricultural holding.
I, too, am a partner in an agricultural business.
We will take evidence on a range of matters relevant to the agricultural sector. I welcome back, from the Scottish Government, Fergus Ewing, Cabinet Secretary for Rural Economy and Connectivity. He is accompanied by Annabel Turpie, chief operating officer, Douglas Petrie, head of area offices and head of agricultural profession, Eddie Turnbull, head of information services and Andrew Watson, deputy director for agricultural policy implementation.
I invite you to make an opening statement, cabinet secretary. Due to the length of the last agenda item, I would like you to limit your statement to three minutes.
The past year has been particularly challenging for farmers and crofters, largely because of the impact of the weather. Starting with a wet summer, the total amount of rain increased relatively modestly, but the key issue was that the number of days on which rain fell increased dramatically, meaning that farmers and crofters struggled to secure their hay, silage and cereal crops. Everything was late and many farmers and crofters went into the winter period with far lower than normal stocks of feed and fodder, as I discovered on farm visits, as I am sure did other members.
Compounding that situation, there was severe weather from early March right through to early April, which had a bad effect on lambing and calving performance. It has been quite distressing to hear of the losses of stock that some have suffered, despite their very best efforts. Weather can be a cruel mistress.
The Scottish Government has not sat still and watched without taking action. Recognising that problems were being caused, I initiated the basic payment scheme loan scheme, with farmers and crofters receiving 90 per cent of their payments from the end of October—loans totalling £317 million. I am pleased to say that we started to make the balance payments on 3 April and we have completed 12,586 payments. We are on track to meet the regulatory target by the end of June. We have already made suckler beef support payments.
In November, I set up the weather advisory panel, which brings together experts to give practical advice on future resilience. The panel has met on five occasions and has promoted several initiatives, such as feed budgeting and rural and mental health. The panel will meet again at the Royal Highland Show.
As the poor weather continued into the spring and with reports of costs rising, I initiated the national LFAS loan scheme, with payments going out in the first few days of April to help support business cash flow. So far, 8,339 farmers have received £52.3 million. In addition, on 18 April, I announced a further package of measures, including £250,000 towards the additional costs of uplifting fallen stock and a £25,000 contribution to RSABI to support its role in providing confidential listening and support for Scotland’s farmers and land managers—RSABI has had a particularly important role as farmers and crofters have struggled with the impact of the weather this past year and I am pleased to support it.
I have convened an all-industry meeting to look at issues on feed and fodder as we go into the summer period, and that will take place tomorrow. Many farms’ fodder stores are exhausted, and planning now by the industry as a whole will be important for building resilience for later in the year. It is worth noting that we are the only Administration in the UK to provide such additional support.
Finally, at a meeting with Mr Hogan some weeks back, I secured from the EU Commission a full derogation, for a year, from the crop diversification rules for 2018 for arable farmers. Therefore, I hope that we have not been idle.
Thank you, cabinet secretary. Our first question is from Richard Lyle.
I want to ask about the CAP payments IT system costs. It is my belief that, due to various organisation requests and requirements, we ended up with a very complicated system. Last month, an article that appeared in a newspaper claimed that IT costs have risen dramatically. What is the cost of the system to date? Is the system now fully functional, so that it can pay farmers, on time, the money that they deserve?
The CAP IT costs have been substantial, but some reports have been exaggerated in saying that they are £250 million. However, as I have made clear, we are holding to the figure of £178 million to deliver functionality and the benefits of the system. During the financial year 2017-18 we have been closely monitoring costs and delivery from the former futures programme. My officials can provide more information on that if it is required. Mr Turnbull will be able to provide full information if committee members want to explore that in further detail.
You have answered my second question: the figure of £178 million is the IT cost. Have the recommendations that are set out in the technical assurance review on the ARE futures project been actioned, and is the report now in the public domain? Perhaps Mr Turnbull will want to answer that.
Good progress has been made, but Mr Turnbull can probably provide the committee with the detail.
Eddie Turnbull (Scottish Government)
I will not go into a great deal of detail, but the Fujitsu report is one example of a list of improvements that we have been working on. We have been using that as a template against which we have measured improvement. I will give the committee some brief examples. Committee members will recall that disaster recovery was called out in the Fujitsu report as something that we needed to address. It was also called out by the third generation of the Audit Scotland report. In December 2017, we successfully carried out a controlled disaster recovery test, which meant that we did not see the process right through to conclusion but could monitor it. However, in February we carried out an end-to-end recovery test, in which we switched over to our failover site. One or two issues occurred, but we will follow up on those and have another similar test in July.
Since the review, my objective has been to achieve stability in the service’s availability and also the deliverability of functionality on to the platform. Mr Lyle asked the cabinet secretary about the figure of £178 million. We have been monitoring that and the level of functionality that should be delivered against it, and I would say that we have achieved an acceptable level of stability. For example, during the single application form submission window the system was available for 99.47 per cent of the time. It does not operate 24/7, and we have to bring it down in order to implement changes during what we call controlled downtime. However, during that window we had six hours of unplanned downtime.
To answer Mr Lyle’s specific question about the Fujitsu report, I hold to the original statement that there was information that was commercially sensitive; it still is, and it is also security sensitive. I impress upon committee members how important it is that we do not put out in the public domain information about how our system works; members will recall that that was the prime reason for our not releasing the report.
I understand that you feel that some areas of the report might be security sensitive. Could the analysis of the costs of the system and the reporting on the financial side of the system, as put out by Fujitsu, with no security implications, be made public? The public would be interested to know about the real costs of the system, the running of the system and the alternatives. Could that information be made available?
I am happy to go away and look at that matter. We need to take care with such issues and come to the right conclusion. We want to provide the committee with as much information as we can as quickly as possible. The committee will appreciate that my primary function is to ensure that my officials do the job, but we also wish to do so in as transparent a way as possible. I will go away and look at the matter before coming back to the committee, if I may.
The cabinet secretary will recall that, 20 years ago, I retired as the director of technology innovation at the Bank of Scotland, so I am 20 years obsolete. However, I am not unfamiliar with some of the challenges of running projects of such scale.
I am sure that the question is not whether you are obsolete. [Laughter.]
Well, I am bidding for consultancy work or something.
We have a much more complex support scheme in Scotland than there is elsewhere in the UK, because that is what farmers asked for. Is the system that we are now implementing sufficiently flexible to meet the inevitable set of changes that there will be at our hand? To what extent is the system flexible enough, in any realistic sense, to manage after Brexit?
There are two answers to that question. There is the political answer and the technical answer. I will give the political answer, and I will pass to Mr Turnbull for the technical IT answer.
The current system is ludicrously complicated. I say that from a position of some experience. The database contains 743 different table types, with 8,839 unique attributes and 1,067,229,730 unique records. The database needs to deal with 700,000 land parcels, 4 million hectares of land and 1.7 million internal features. The margin of error that is acceptable under EU rules is half the size of a tennis court. If there is one aspect of the EU that I feel is ripe for reform and simplification, it is that area—incidentally, Commissioner Hogan agrees with me. However, we made it additionally complicated in Scotland by having the three-regions approach. My personal political view is that, in designing the transition period, we need to bring in stability and certainty, but, when we design a new system, we should bear in mind that the perfect can be the enemy of the good.
Simplicity in a new system would have a lot to commend it because, apart from anything else, it would avoid the scenario—which, sadly, we have been in—in which we are not able to operate the system as well as we would like. That is why we have adopted a plan B pragmatic approach in utilising loans, at 90 per cent in most cases. From a business point of view, that has been a very good plan B. I quoted the figures—I am not sure whether they have been in the public domain—to illustrate how complex and difficult the system is. Perhaps Mr Turnbull will be able to say whether the system can be adapted for the future, because that is an important and technical point.
Mr Turnbull, you can address that point. However, the cabinet secretary has given a fairly technical answer about lines and data, so I ask you to keep your answer very short.
Again, I refer to the Fujitsu report, which said that the architecture was fundamentally sound and that we should not scrap it. We should go back to that original premise. The system has been built in components. We have a customer administration and customer relationship management part of the system, a payments part of the system and a rules-based part of the system, so there are a number of components that can clearly be reused. However, at this point, I will not commit—the committee would not expect me to—to exactly what we would need to do to adapt the system so that it could work in a new environment. However, we have started some of that work, based on the information that we have.11:45
The cabinet secretary mentioned £178 million as the estimated cost for the basic functionality of the system. Do we have an idea of the potential total cost, including any remedial work that has to be done? That is before we take into consideration the cost of any alterations to the modules that will be required for any future systems. Are we lumbered with a system that has gone vastly over budget and which will in fact be redundant to us in just a matter of years?
Eddie Turnbull may answer that briefly.
I will, very briefly. Jamie Greene’s first question related to the £178 million, which was for a system that would basically work and make payments. That is point 1, and that is what we have held to for that.
The second question was around enhancements to that system to make it work better and meet the requirements of area offices in terms of the business that they undertake. Perhaps Douglas Petrie can pick up that piece. There has been expenditure further to the £178 million this year, but that expenditure is not just on the rural payments and services system—it is on all our information technology services. We manage more at Saughton house than just the rural payments system.
As the cabinet secretary offered, we can do a breakdown by feature of the basic foundation cost and what we have been spending on each of our components of service. We can supply that to the committee.
I am not just looking for a breakdown. Do you have an estimated total cost for the system to have basic functionality and the functionality that it was originally designed to have?
Yes, it is £178 million. That was the original business case—
What about the secondary expenditures? Can you give us the scale of that—
Any computer system requires to be maintained beyond its initial inception. As the area offices and customers start to use the system, we will want to implement enhancements to make it work better—to make it more efficient—to ensure that we meet the deadlines that we have set. For much of this year our focus has been on achieving that stability around the provision of services.
Again, we have figures that I can break down, if the committee would find that useful.
Maybe a written breakdown would be helpful. Before we move on from this question, when you last discussed this matter with the committee, you said that the current computer relied on previous computers to produce what it has to produce. Is that still the situation?
That is still the case. There are two major parts of that that we are implementing imminently, but there will still be a requirement to connect to legacy systems for legacy schemes.
When will the computer just issue the payments, without you having to do it? That is my final question—when can you put in the information and the payments will automatically come out the other end?
For the vast majority of cases, the system is doing that. No doubt we will get into where we are at the moment, but the system is working for almost all processing requirements.
Just to be clear and complete, one part of functionality that was identified in the original business case has still to be implemented. We are currently assessing the benefit of that in the light of what the system will need to do beyond the current period.
Just to clarify—because you have now raised another question—is that the forward-facing bit or the bit within the system? The system was meant to be able to talk to farmers and tell them what was happening.
In terms of planning their land, that is the forward-looking piece.
So that is the bit that is still not working.
That is the piece that we have still to deliver.
Okay. Thank you.
On 12 September, the Scottish Government published the common agricultural policy plan for stabilisation. The stated aim of the plan
“is to target specific and sustainable improvements in our strategic approach ... deliver value for money and maintain compliance with EC regulations”,
and it consists of six main areas of action. Have all the actions in the CAP plan for stabilisation been completed?
As the stabilisation plan set out a scheme that will apply beyond now, by definition, it has not been completed. It applies to the totality of payments, some of which do not have specific time limits under EU law and pillar 2. Annabel Turpie can give a bit more detail, if that would be helpful.
Annabel Turpie (Scottish Government)
In summary, the package of commitments has worked well, albeit not perfectly. It has fulfilled its purpose by putting a stake in the ground and saying, “We want to move on.” We have given certainty to customers and have got money out earlier than we did previously. In the case of BPS loans, we got money out before 1 December, and we accelerated the pillar 2 payments. I suspect that we will come on to payment progress shortly, so I will not go through the numbers, but we are making payments three months earlier than we were last year. We have ensured that the maximum number of customers have benefited from our online system without the technical disruption that many of them faced in previous years. As the cabinet secretary said, some of the relevant actions are a matter of continuous improvement rather than being ones that we can tick as complete and move on from.
I give Eddie Turnbull a heads-up that I will pass over to him shortly.
Our customer services get online campaign has been very successful. Significant communications and support were deployed. That happened alongside changes to introduce improved functionality for customers and a simplified process for people who had forgotten their identity. Since last year, we have converted around half of our paper customers, achieving an online figure of 89 per cent. That took a lot of work by people across the area offices and in Saughton house. One of the side benefits of that was that we got positive feedback from people who thought that they would never go on the system, who said that it made it really easy for them to apply, for which they thanked us. Staff were encouraged and motivated by the good feedback that they got, because our people really want to serve the farmers, crofters and businesses of Scotland. There was a very positive reaction to that all round.
A lot of the CAP stabilisation plan was about stabilising the IT functionality, which Eddie Turnbull might have more to say about.
I think that the issue has been covered in what has been said about the Fujitsu report, disaster recovery and so on, but I can give an example that relates to the SAF submission window.
We have had feedback from area offices and customers that the system has worked for them. In a few cases, we have had reports of poor performance, but I assure you that we have followed up on those reports to find out whether our system has been at fault or whether the problem has been to do with connectivity or the local technology involved. The area office staff have been terrific in supporting us in that work. This year, we had 31 calls about cases in which there was a suspicion that the system was not working, but we have established that the cause was an issue with the system in only six of those cases. That compares favourably with the situation last year, when we received 114 calls. There has been improvement. The feedback that we have had—anecdotal though it is—is that the service has improved greatly during that window.
One of the great frustrations early on was to do with how changes in land ownership and land management were handled. That is one of the six main areas in the stabilisation plan. Do you feel that that has been successfully addressed?
I would say that that is work in progress. We are doing a very large and challenging updating and enriching of our data, and we have done the first of a small number of data migrations. That is challenging. As we have seen from the news over the past two weeks, the updating of systems and the incorporation of new data are always challenging. As the cabinet secretary and Eddie Turnbull said, we have records on hundreds of thousands of land parcels, to which very specific rule sets apply, and that information needs to be updated.
I am very pleased with the progress that we have made on data migration. I wish that we had made it sooner, because our system depends on our having up-to-date data, and it is inevitable that there will be an impact on farmers. That is frustrating for them, but we have to do that work. We must make sure that, when we bring in the data, it is correct. That is why we have reflected on our plans and adjusted our timing.
The new land parcel identification system tool has not been introduced yet—the timeframe for that is longer. That is why I describe this as work in progress, but it is important that we do it. Doing that while running a system, making payments, dealing with customer queries and supporting farmers is difficult and asks a lot of our people.
The stabilisation plan brought in loans. In the 2017 scheme year for BPS and LFASS, what percentage of those who were eligible for loans did not take them up? Not everyone takes up such loans.
Annabel Turpie will deal with the detail, but the overall picture is that 75 per cent of farmers received 90 per cent of their money—that was the case in October for the BPS. The normal BPS period is from December and January to June, and getting £90 in October as opposed to £100 between January and June is a good plan B from a business point of view.
I will not be satisfied until everything is sorted out completely. We are not at all complacent, but I am confident that the progress that we are making is improving quality and delivery.
I want to understand the position. In 2014-15, farmers got 100 per cent of their payments at the beginning of December, whereas you say that the loan system provides 90 per cent, with 10 per cent held over. Is it your ultimate aim to get back to paying farmers 100 per cent at the beginning of December, as was the case in 2014-15?
I would like the system to work as well as it should and as well as it did in the past. That is my ultimate objective. However, loans are a pragmatic alternative, and to all intents and purposes they are advance payments—no interest is charged unless, in the unlikely event of a clawback, the clawback is repaid late. I am not saying that the system is perfect and I am not satisfied—do not get me wrong—but the system is a good pragmatic alternative from a business point of view in most cases.
I am worried about the number of people who are still not taking up loans. The problem might be that they think that the loans have heavy interest rates, which they do not. It is therefore useful to have the opportunity to restate the position for the record.
If Annabel Turpie has the exact figures easily to hand, I am happy to hear them now, or the committee would be happy to have them in writing after the meeting.
I have the figures but not the percentages, although I think that my rough arithmetic is correct. We made 10,839 offers of LFASS loans, of which 8,360 were accepted. I think that that leaves about 24 per cent not taken up, although that is bound to bite me when I get the right percentage. We made 17,625 offers of BPS loans, of which 13,581 were accepted. That leaves about 23 per cent. I will confirm the percentages in writing.
In all our public engagement about the loan scheme, we and the area offices have made it really clear to farmers and agents that anyone who is interested in applying for a loan and who has not been offered one should get in touch with us directly. There are reasons why we cannot offer some people loans, but new entrants come in all the time. I am aware of a few cases in which we have paid LFASS loans even in the past few weeks. Anybody who did not take up an LFASS loan that they were offered can still take it up, as the loan scheme is still open, so I ask them to please get in touch.
Area offices are in regular contact with customers, and they work hard with colleagues in Saughton to provide appropriate support to our customers who are experiencing hardship. Such conversations can be difficult, but our staff are focused on and skilled in support.
I calculate that 90 per cent of 75 per cent brings the figure down to 67.5 per cent, so only two thirds of the money that normally goes into the rural economy in December is going into it then. If the loan scheme is so good, surely we should know why 25 per cent of farmers are not taking up loans.12:00
That is a very serious but fair question, and it is one that we have done a lot of work on, which Douglas might be better able to describe, as he runs the area office.
Douglas Petrie (Scottish Government)
I cannot give you figures for the take-up, but, anecdotally, some of it is down to the level of payment, which is not a significant amount of money in some farmers’ eyes. Some of it is down to the fact that the money is called a “loan” and some farmers think that, for the amount that it is, they do not want a loan. In some cases—unpalatable as this might be—some farmers choose not to take the money because they do not need it at that time. I cannot put figures on it, and that is not an exhaustive list, but that is some of the feedback that I have had.
The minister is making it clear that it is not a loan but an advance payment. Is that being focused on in the farming community?
Yes, it is—absolutely. We have had multiple conversations, but the fact that some of the paperwork still says “loan” makes it a difficult point to get over.
In 2016, we rang round a couple of hundred people who had not taken up the loans to find out why they had not done so. Our findings strongly mirrored the analysis that we did last year, which I am happy to dig out. Even knowing that they could still take advantage of the loan, not many people asked to do so, even when we went through it and explained the circumstances. As Mr Ewing said, we look into the matter very thoroughly.
As Douglas Petrie said, legally, the Scottish Government cannot call it an “advance payment”; we have to call it a “loan”. However, we do everything that we can in our communications to make it clear to people that there is no interest attached to it.
Do European rules say that you have to call it a loan, even though it is really an advance payment?
Okay. Could you send the information from the study to the convener?
Yes, of course.
The actual figures would be very useful to the committee. Thank you.
My question is on the back of the previous questions. The witnesses might have touched on this already, but, for the record, what is the latest news on the status of pillar 1 and pillar 2 payments for 2015, 2016 and 2017?
We have made all the payments for 2015 and all but one of the payments for 2016. In my opening comments, I referred to the figure for 2017. Perhaps Annabel Turpie can give the detail of the figures.
You said there had been 12,586 payments, cabinet secretary.
I will start with 2015. As the cabinet secretary said, we have made all the BPS payments to those who were eligible according to the information that we have. As for pillar 2 schemes, we have no further claims to pay on the agri-environment climate scheme, or AECS; on the forestry grant scheme, or FGS; or on the beef efficiency scheme, or BES. In the case of the BES, that is because it was not paid in that year. For rural priorities, we have six claims still to pay, with an estimated value of £43,000. For the land managers option scheme, or LMO, we have three claims still to pay, with an estimated value of £2.9 million. For LFASS, we have 113 claims still to pay, with a value of approximately £1 million. I will send that information to the clerks with an explanation of the acronyms. I appreciate that they are familiar to me but not to everybody. Additionally, for the LFASS claims that have not been paid, I can provide figures of how many people received loans. I can update the committee on that separately.
As the cabinet secretary said, we still have one outstanding claim for 2016, but it is a penalty case in which we do not expect to make a payment. That is the position. We do not have any claims to pay on beef or sheep voluntary coupled support. As for pillar 2, we expect to pay 22 claims for rural priorities, which we estimate to be worth £90,000. We have 15 claims to pay for LMO, which will be worth £20,000. There are five claims to pay for AECS, worth £40,000, but there are none for FGS. There are eight claims to pay for BES, worth £59,000, and 396 for LFASS, worth £2.3 million.
If the committee will give me one second, I will find out the number of people who have received loans on the LFASS payments. I apologise—I have a lot of information here. Forty-five of the 113 applicants for LFASS payments in 2015 received an offer and were paid a loan in 2017, and 222 of the outstanding applications for LFASS in 2016 were received and were paid a loan. We plan to make additional LFASS payment runs for 2015 and 2016 later this month.
I have some questions on figures that were sent to the committee on, I think, Monday, in a monthly update on scheme payments that is said to relate to data that was captured on 29 May 2018.
I apologise, convener—I have just realised that I have not given you the 2017 figures. I believe that those figures relate to 2017.
In that case, you may be able to add to this. Unfortunately, the update sheet does not tell us how many business registration numbers there are in Scotland. However, looking back at the records and according to the figures that I have from your monthly update, in August 2017 there were 17,997 of them. You have suggested that, by the end of the most recent payment run, 11,510 BRNs had been processed. I assume that, by the time the BRNs have been processed, those businesses will have been paid in full.
In his earlier remarks, the cabinet secretary alluded to 12,586 BRNs having been processed as at today’s date, so I assume that the position has changed between 29 May and today’s date. The figure of 17,997 BRNs in 2017 means that roughly 5,411—that figure may be exact if we have the same number of businesses—have not been processed. Is that correct? When will the payments be completed? Will that be done by 30 June, which is the critical date?
We are doing weekly payment runs, so I have a figure that has been updated beyond the one that Mr Ewing provided. We have made payments for 13,171 BRNs for 2017. I apologise for restating what I have said before, but it displays some of the complexity with which we are dealing. We expect to make 18,300 payments, but we are still getting information from customers. Some of the people whom we think are eligible just now will undoubtedly become ineligible, as happens every year—that number always varies. We have, therefore, made 72 per cent of the payments and, as you have said, convener, we have just over 5,000 payments to go.
We are now in an intense processing period, which we are managing. As the committee would expect, we have, once again, set up a dedicated payments team who are making sure that we understand what our trajectory is, that we are working on it and that the people who need to do things are doing them. A lot of the people who need to do things in order to meet the 95.24 per cent target—which is a UK-wide target—are in our area offices; therefore, this year, Douglas Petrie has introduced a change in having a very strong and supported network with one SAF co-ordinator in every office. The co-ordinators meet regularly by videoconference and by phone, and they make sure that, across the offices, we are addressing all the errors that we need to address. Some offices are further ahead than others, and we will move either cases or people about accordingly. We have brought in an additional team of 12 people at Saughton house, who can help with error processing where that is appropriate.
We continue to work through any data issues that arise. Members will remember that, last year, we had what we called a “fog” of land issues. We do not have anything like that this year, but the question of regions is still complicated. There is still work to do to allocate those to applications for tiny slivers of land that do not have a region. There will not be payments in the majority of such cases, but the system requires that applications have associated regions, so we are back into the complexity of the system.
We work in teams. Every day, I have a meeting at which we look at our progress and check that we are on track to reach the figure of 95.24 per cent, which we absolutely are. I am trying to answer the convener’s question about whether we will achieve that by the target date. It is tight, but we are ahead of last year, which is good. I—and we, as an organisation—do not want to be in the position of still having several thousand applications to get through in June. Barring anything coming up, the target date is what we are aiming towards.
There was a huge amount of detail in that. If I remember rightly, the 95.25 per cent that was achieved last year to prevent us from being in trouble was achieved when the UK was aggregated. Is the 95.25 per cent going to be achieved in Scotland by the June deadline?
That is what we are aiming for and what our trajectory is.
I will make a general observation. Will you explain why, given the numbers that you have just provided, millions of pounds in payments are still outstanding to hundreds of farmers going as far back as 2015? What are the reasons for those delays? It seems like a substantial amount of money has still not been paid to farmers over the past couple of years.
Douglas Petrie has the benefit of having been in the organisation previous to this CAP regime, so he might be able to come in on the question. However, in any year, there are always a number of complex cases. Sometimes, they can involve disputes over who owns the land or requirements for customers to provide lots of information, which does not come quickly enough. Sometimes we have to do assessments and sometimes we have inspections that throw up errors that have to be checked. Douglas Petrie might be able to give more examples and a more from-the-ground perspective on the matter.
My understanding is that, going back many years, there is always a tail of complex cases. We are working through them. We also have a lot of work to do to get payments out now for SAF 17. Therefore, in some respects, we are always keeping an eye on ensuring that we balance everything. Sometimes, that just adds time.
I am conscious of the questions that we need to get through. Do you still have to shut down the payments for the year that we are in to make a payment for the previous year? That is what happened before. Is it still the case?
Certainly that happens between schemes because of how we handle debts. Debts are loaded against specific schemes so, to make LFASS payments, we take all the debts that are on the system for BPS payments and load the LFASS information. That has a time implication.
Andrew Watson might know whether the same issue exists between years.
Andrew Watson (Scottish Government)
No. The main issue is the processing of debt, as Annabel Turpie describes.
I will ask about the severe weather payments. On 18 April, the Government announced a £250,000 package of support to help meet the costs of retrieving fallen livestock and to address feed and fodder shortages, for instance. How much of the £250,000 has been allocated so far? What longer-term solutions are you considering to address the further problems that are likely to occur later this autumn and to manage similar extreme weather events in future?
The sum of £250,000 was provided through the NFSCo CIC—the national fallen stock company. That is the vehicle through which it was done and, as Mr Chapman probably knows, the one that was used before. The aim is to offset some of the extra costs to farmers of dealing with dead sheep and cattle. The support will cover the February to April period and will be made available to farmers in areas of Scotland that are covered by fallen stock collection services. Applications closed on 31 May and support payments are expected to be made in July. We are happy to provide reports in response to Mr Chapman’s question then.
We want the money to be used. It is a relatively modest amount, but I want very much to acknowledge our appreciation of just how bad it has been economically and on a human level, as I am sure Mr Chapman knows extremely well. We are also extremely concerned about mental health issues, particularly for those farmers who are alone, perhaps isolated and working day in, day out in the weather. The rest of us can close our doors to that, but it is a fairly dismal experience if a farmer, day after day, has to deal with the difficulties that are added by appalling weather and, of course, fallen stock.12:15
It would be useful for you to update the committee, so I ask that that be included in the scheme payment monthly update that is submitted to the committee. I assume that after June, which is the critical period, you will see that we get an update to summarise June’s position as soon as possible.
It is a non-recurring matter, but we will certainly get the information to you.
At this time, you do not know how much of that money has been allocated. I understand that, but what about longer-term solutions? You said that you were going to convene some meetings to look at the longer-term issues.
We established the agriculture weather advisory panel to look at the impacts of the weather on business resilience. The farmers on the committee will be more familiar with those than I am, but the panel will have practical ideas, such as for the sharing of fodder between those parts of the country where there is more ample fodder, silage and so on, and those parts that are under pressure. Those kinds of practical ideas are being pursued as well as other matters. Perhaps my colleagues want to add something.
I co-chair the agricultural weather advisory panel. I have attended the meetings, which have been positive discussions with a focus very much on longer-term resilience in the sector. As well as the fallen stock support that we have described, we have spent quite a bit of time looking at issues such as feed budgeting and the support that we can give to that.
Another key issue has been the engagement of the Met Office with the panel. One of the lessons from the heavy snow, as I understand it, is that the snow conditions were such that it made our forecasting more predictable and certain. That had a beneficial effect in that we gave farmers at least some notice for the planning that they needed to do, which was really welcome. We are interested in exploring how we can make even better use of the Met Office in engaging with the sectors. That is certainly one issue for us.
The panel’s next meeting is, as the cabinet secretary said, at the Royal Highland Show. We are now getting into the summer, so we are deliberately looking far ahead and seeing what lessons can be learned for next winter.
I have a question about live animal exports. I had a series of questions but, given time constraints, I will roll them together. If the convener will allow me to give a bit of background, the Scottish Parliament information centre has produced a briefing on the issue entitled “Live animal exports—ban or no ban?”
We know that the UK Government has launched a call for evidence, and you might be familiar with the fact that your colleague Christine Grahame has launched a motion calling on the Scottish Government to engage in the consultation on a ban on the export of live animals. As further background for others, animal welfare is devolved but trade is reserved—that is acknowledged. The UK Government has a call out for evidence.
I have a couple of points. How are you engaging with the UK Government? What impact would a ban have on Scottish agriculture? If the UK were to introduce a ban, would Scotland be able to opt out?
Before you answer, I note that, under the heading “What is the Scottish Government’s position?”, the SPICe briefing that I referred to quotes you from a BBC interview as saying:
“Let me be absolutely clear, this is one UK-wide framework the Scottish government will not be participating in. I will not support anything that creates further challenges or difficulty for our farming sector or puts Scottish agriculture at a disadvantage.”
We are co-operating with the UK Government on that. To be clear, animals are transported for different reasons. There is currently no export of live animals from Scotland directly for slaughter in continental Europe.
The scope of the UK Government’s call for evidence is limited to the question of banning the export of live animals for slaughter. As I understand it, that is its purview, and nothing beyond that.
First, the highest animal welfare standards must prevail. It is essential to aim to limit transport to that which is necessary. Secondly, it is essential for the standards to be applied extremely diligently. I have rightly spent a lot of time with my officials on ensuring that we adopt that practice, which we do. My officials are engaged in a study, which I think is the first in Europe, in which they will travel to Spain to monitor the conditions that pertain. Stops for hydration and rest for animals are built in, and we are applying the EU rules to the letter. It is important for me to say all that because, sadly, there has been a lot of misreporting.
Without the capacity to transport animals, our farmers who operate in Orkney, Shetland or any of our islands would be unable to do livestock farming. We should bear that in mind. Animals are transported for a variety of purposes other than slaughter, such as being shown at the Royal Highland Show and shows around the country.
I am grateful for the opportunity to stress that the key is that the highest welfare standards must be applied. The legal framework allows farmers in Scotland to do what is necessary. We criticise some practices that have been pursued not in Scotland but in the export of animals from England. For legal reasons, I will not go into that, but there has undoubtedly been some bad practice, which we condemn as strongly as anyone else.
That is extremely reassuring. If such export is not taking place from Scotland, I do not understand why you talked about “further challenges or difficulty” for the Scottish agricultural sector. You talked about hydration and rest stops and, under the previous agenda item, you said—I hope that I noted it correctly—that slowing each lorry by two minutes would result in a 70-mile queue. Surely there should therefore be no difficulty in getting fully behind a ban. Animal welfare is devolved and you are in a position to respond to public concern and work towards a total ban, which should not conflict with anything that you described.
The point seems to be fair, but it presupposes what we are being asked to support. It is necessary to transport animals. Whether they are transported on land or at sea, the welfare standards must be equally high. Animals are exported—for example, to Northern Ireland—for necessary purposes other than slaughter, and it is important for that to continue, but it must only be in accordance with the highest standards.
Some people originally thought that the UK Government proposed to ban all exports of animals, but that is not what I understand to be proposed. In fact, the proposal is limited to a ban on export directly for slaughter, which is a particular instance that does not apply to Scotland. I hope that that will be looked at extremely carefully, because we are not certain that high welfare standards are being applied there.
We do not want to be part of a framework that imposes a blanket ban on the transport of animals. I have seen a letter from the leader of Shetland Islands Council that calls on Michael Gove to come and see the conditions on the Serco ferries, for example. The issue is important and I am grateful to have had the opportunity to set the record straight.
I will roll together a couple of questions. If any area is uninvestigated, I might raise it.
There is no suggestion that the transport of animals from Scottish islands to the mainland or between Great Britain and Northern Ireland should be banned. The concern is about the transport of animals outwith the UK, where we have no control over their welfare. That is what a ban is supported for. I am not clear about the Scottish Government’s view on that. Do you support a ban on the export of live animals for slaughter or fattening—yes or no?
I agree very much with what Colin Smyth has just said. Welfare organisations have told me that, although animals from Scotland are not exported directly, they find their way to Northern Ireland and into the Republic of Ireland and are then exported to Spain and north Africa, where welfare standards may not be as high as they are here. Therefore the concern is not so much about direct exports from Scotland but about Scottish animals ending up in Spain and north Africa for slaughter.
We support the UK Government’s call for evidence on this issue, which it would be useful to have. We reserve our position on not making any changes to the current EU and national legislation that could disadvantage Scottish agriculture, for the reasons that I have stated. I confirm that we are carrying out pioneering work—more details of which I can share with the committee—precisely because we are determined to ensure that the highest welfare standards prevail. There is no doubt or disagreement about that. Sadly, there has been a lot of misreporting—particularly on social media, I regret to say.
I will let John Finnie have one more go at that.
Cabinet secretary, every time you reassure me, you go on to give me cause for concern. Surely no advantage to the Scottish agriculture sector would be gained by there being dubiety about the highest animal welfare standards applying. Wanting a ban is not in conflict with that. My colleague Colin Smyth has outlined what the position is. I represent the Highlands and Islands, so I know and appreciate the concern that there is about the high welfare standards that apply to transporting animals there. However, we are talking about export for slaughter in areas in which standards are not the highest. I would have hoped that, as Scotland’s Cabinet Secretary for Rural Economy and Connectivity, you would have thrown your weight behind the public concern that there is about that.
I do not really understand the premise of the question. We support the UK Government’s call for evidence on the issue. We also support the highest welfare standards and are determined to do everything that we can to ensure that they apply. In case there should be any dubiety on the matter, that is precisely why we are proceeding with that work. My officials are directly involved, and I believe that they are ready to travel to Spain themselves to inspect what is going on. That is precisely because I would be concerned about any failure to meet those high standards.
Has there, as some people have suggested, been a reduction in tenant farming over quite a long number of years? I note that yesterday the Scottish Tenant Farmers Association issued a press release calling for the sale of Auchenhalrig farm in Fochabers to be stopped. Does it concern you that there seems to be a reduction in the number of tenant farms that are available? Would tackling that be a question of changing the law, or could we change the atmosphere or do anything else to tackle it?
The Scottish Government is very supportive of tenant farmers across the country. In answer to the question that John Mason asked in the previous evidence session, I outlined the various ways in which we try to direct such support. In many parts of the country, including in my constituency, most farms are rented, and usually from large estates. I stress that the picture is not all doom and gloom. A recent survey—the full details of which I do not, I am sorry, have to hand—reported on the attitudes of tenants and landowners. [Interruption.] I am grateful to my officials for giving me the statistics. They confirm that I am right, which is always reassuring—about the summary view of that research, which was that the figures on parties being content were 88 per cent for landlords and 82 per cent for tenants. Such evidence is useful, as it has been surveyed.12:30
However, where people are discontent, there can be very severe problems, particularly for tenant farmers who live on their farms and rent their homes as part of their holdings. Difficult issues, particularly on rent review, have caused a huge amount of misery and anxiety—as, I am sure, members are all aware from constituency work.
I would very much like to see an even more vibrant rented sector, and I would like to get across to landowners the message that we are not proceeding with legislation on an absolute right to buy. Apart from anything else, that would clearly be illegal under article 1 of protocol 1 to the European convention on human rights. It is not on the agenda; therefore, to my mind, there is no restriction on or impediment to private contractual arrangements between landlord and tenant. When those work well, those private business arrangements operate between individuals between whom trust exists, which is the key thing.
Lastly, we have rent-review provisions that we want to bring to Parliament as soon as we can. They are very complex—the capacity of a farm is not a simple matter, by any means—but there has been good work done by all stakeholders. I will not be drawn on the timescale, convener, but I hope that before too long we will introduce the relevant subordinate legislation to implement the last part of the land reform legislation.
I am grateful for that. You said that the tenant farm sector is quite vibrant and that the problems really exist just around the edges. You also said that the Government has released land to encourage more people into farming, which sounds positive. Do you not feel that something very dramatic needs to be done?
The sector is vibrant where it works well, but where it does not I would not wish to apply that word, at all. I am saying that I do not think that there is any impediment to more leases being granted. From discussion with farmers, I know that there are lots of different types of arrangements. Many farmers who have their own farms also manage others, and do so very well. There are lots of different contractual arrangements; leasing is not the only option. However, I am aware that there are, sadly, grave difficulties for a number of tenant farmers, which is why we have the tenant farming commissioner and a number of important pieces of legislation to try to improve such issues.
I recognise that the tenant farming commissioner has done some good work. The cabinet secretary is also right to say that, in many cases, relationships between tenant farmers and their landlords have improved. However, the reality is that, over a number of years, we have lost tens of thousands of acres to the tenanted sector. Landlords see farming as being high risk and low return, which is part of the problem.
I encourage landlords to think about having private contractual arrangements. I do not think that there are any impediments to their doing so. Some of the perceived impediments are not real, and it is useful to have an opportunity to do things in that way. However, at the end of the day, it is not up to Governments to make such arrangements. We have an existing legal framework, under which the options of short and limited-duration tenancies exist, and grazing leases can be deployed. There is a range of other options. It is for people who are in business to make their own arrangements; I encourage them to do so.
I share Mr Chapman’s concern about the diminution in the rented sector, which I hope we can address. I am very pleased that the farming opportunities for new entrants—FONE—initiative that Henry Graham has been chairing has identified opportunities for younger people to come into farming on public land. That is an area where, in the post-Brexit scenario, I am sure that all of us would wish to see what more can be done, particularly since the average age of farmers, like myself, is 60.
I do not know whether you are comparing your age or the fact that you are a farmer.
I would like to raise a concern of a lot of people to whom I have spoken. I accept that there are lots of different forms of tenancy, but long-term tenancies allow people to invest, because there is huge cost in investing in machinery and animals. There is a perceived threat on the horizon that does not seem to go away, and that is the threat of the right to buy. If that was taken off the table, would that increase the number of tenant opportunities that would be available in Scotland?
I have already tried to answer that question by saying that the absolute right to buy is not on the table at the moment.
It is not “at the moment.” That is the problem.
We have no plans in that respect. An absolute right to buy is not in our programme for government: we tend to try to do the things that are in our programme for government. We have no plans to introduce a right to buy—it is not on the table. There is no impediment to lease arrangements being entered into. It is useful for me, as cabinet secretary, to have the opportunity to confirm that that is the case.
I personally wish to see land used to its best effect, and leasing of land is simply a legal mechanism to enable that objective to be achieved, and also to see more people come into farming. As a tenant, one does not pay the capital cost of purchasing land, so tenancy is a better vehicle for new entrants than outright purchase, the cost of which may well be beyond most young people. That is an important point.
I am grateful for this line of questioning—surprising as that may seem—because it allows me to confirm that, from my point of view, having discussed the matter with many surveyors, the absolute right to buy is not on the table. The Scottish Government has no plans to go ahead with such a right, and we are here until 2021, barring the unforeseen. I hope that that provides some assurance. I would love to see more rented options being pursued by landowners around the country, and I urge them to reconsider so doing.
The final question is to tie together something that you said previously about the reports from the national council of rural advisers. I believe that a statement is to be made in Parliament about that next week—on Tuesday, I think. Can you confirm whether the report will be published before that? If not, when will the report be published?
The final report will not be published for a few months yet, but a discussion paper will be published and it will be substantial. Because I have had some involvement with the NCRA’s work and am aware of some of its thinking—the committee will be aware of the previous document that it published—I think that it should be the subject of a parliamentary statement. I do not want to prejudice that and get myself into hot water with the Presiding Officer, so I am not sure that I should go too much further than that, but you will know by next week—on Tuesday or Thursday.
That brings our evidence session to a close. Thank you, cabinet secretary. I also thank Annabel Turpie, Douglas Petrie, Andrew Watson and Eddie Turnbull for coming along and supporting you.12:38 Meeting suspended.
12:39 On resuming—
Traffic Signs (Amendment) (Scotland) Regulations and General Directions 2018 (SSI 2018/161)
Item 3 is subordinate legislation. There are two instruments that are subject to negative procedure to be considered—one on seed fees and one on traffic signs. I remind members that we have already made declarations of interests, but it might be useful to do it again because we suspended the meeting. I am a member of an agricultural farming partnership.
I own a small agricultural holding.
I, too, am a member of a farming partnership.
I confirm that no motions to annul the instruments have been lodged. Does the committee therefore agree to make no recommendation on the instruments?
Members indicated agreement.Meeting closed at 12:40.