I refer members to my entry in the register of members’ interests.
I remember, just over a year ago, reading the Audit Scotland report into the common agricultural policy information technology system. I have never read such a damning document as that one in all my years in business. It showed a governance structure that was riddled with incompetence, a budget that was wildly out of control and no prospect of getting the additional functionality that was promised.
At the time, the Scottish National Party Government seemed to be absolutely committed to getting the fiasco under control. We had Fergus Ewing in the chamber apologising to farmers and promising that action would be taken. I remember it well—he said, “I will get in aboot it!” I am not sure that the cabinet secretary has got in aboot it, but he is certainly in it.
This year’s update from Audit Scotland is, predictably, not much better. The Scottish Government is at risk of £60 million in fines from the European Union, but the First Minister does not seem to be overly concerned. It is amazing that after all the careful work that Audit Scotland has put in and its careful calculations, the First Minister thinks that she knows best and reckons that it will probably not be that much so why should we get worked up over it?
I recognise that the Auditor General stated last year that the costs would range between £40 million and £125 million, but does Mr Chapman recall that we have made it clear that the actual estimated penalties—so far as we can ascertain them at the current time—are £5 million, and that the factual position is therefore substantially less bleak than it has been painted?
The interesting thing is that they came down to £5 million because we got an extra three months to pay the moneys out—until the end of October. If it happens this year, the figure might be different again, but £60 million is the figure that Audit Scotland came up with in its report and that is the figure that I can legitimately use today.
The situation is indicative of the shocking complacency that defines the Scottish Government’s attitude to what has been the worst cash crisis in a generation for our farmers. The response to that will no doubt be that there are many staff working hard to get the system going as soon as possible and that IT experts are now getting to grips with the system. Unfortunately, as reported by Audit Scotland, there is a risk that as and when contractors leave, the procedure to ensure that knowledge is transferred is inadequate. That is just another of the risks that the report highlighted.
As we speak, out in the local area offices, there are teams working overtime and under huge pressure to deliver for our farmers, but whose job is being made impossible by the faulty, overpriced IT system.
I am going to carry on.
As we speak, there are teams in local area offices who are working overtime under huge pressure to deliver for our farmers. Fergus Ewing regularly sings their praises and I totally agree. They have been doing their absolute best and they have had to endure angry exchanges with farmers who are at their wits’ end because they cannot pay their bills. However, those staff are working with their hands tied behind their backs, and it is the cabinet secretary’s fault.
I know that farmers across Scotland realise that front-line staff are working their socks off every day to ensure that payments are made as quickly as possible, and I have heard that in some offices staff are being asked to cancel holidays and take on yet more hours as we rapidly approach the 30 June deadline for payments.
It was a totally inappropriate question and I will not respond to it. [
That brings us to another of the serious issues that the Audit Scotland report makes clear still need further work. The Scottish Government is required by EU regulations to make 95 per cent of payments by the end of June and there is a great deal of uncertainty about whether that can still be achieved or whether farmers will be left waiting yet again. Frankly, I do not believe that it can be achieved, but maybe the cabinet secretary can reassure us today on the subject; or does he intend to ask the EU for another extension to the payment window? I hope that Mr Ewing will be able to answer that question when he speaks.
Even if it can be achieved, it is still the case that farmers are punished far too harshly for minor errors. Let me give an example. A constituent of mine who forgot to attach maps for this year’s greening application, but who had done all the work, had all the acres in place and submitted all the relevant information, is facing a possible £16,000 penalty. What makes the situation worse is that, last year, a map was not required for the scheme.
Assuming that the farmer’s income is only £12,500, which was the average for 2016, even a Scottish National Party minister should be able to see that that leaves him in the red. His whole year’s profit will be gone at a stroke because of one simple mistake. Perhaps the cabinet secretary can explain why he can make mistakes but still keep his job but my constituent can make a minor mistake like that and lose all his income. Is it the case that stronger for Scotland simply means more support for beleaguered ministers while leaving struggling farmers in the lurch?
One would think that, given the list of failures, there might be some good to take away from all this, in that the worst is behind us, but I am sorry to say that that is not the case. In addition to the issues that plague the system every day, there is a real risk to the payment process from the absence of a back-up system. Audit Scotland highlighted that a year ago but nothing has been done. If a ransomware attack such as the one that hit our national health service just a few weeks ago and created havoc around the world were to be carried out on the CAP IT system, it would be cataclysmic. I am staggered that the SNP has done nothing at all to put in place basic safeguards, and I shudder to think how we would recover from such an attack.
Let us not forget that rural communities will have to go through the same fiasco all over again, as the system is not expected to be fully compliant until 2018 at the earliest. That means that, for nearly half the SNP’s time in government, it will have failed to get to grips with the issue. Assuming that the system works by 2018, the SNP will have spent five years not delivering a system for farmers and not delivering vital money on time to the places that need it the most.
The Government has spent its time apologising for, explaining away and excusing its failure to work for rural Scotland. The question is: can we ever expect it to take positive action and get on with finally fixing its mess?
That the Parliament notes the findings of Audit Scotland’s June 2017 update on the common agricultural policy (CAP) futures programme; notes that it highlights significant further work to be carried out on the CAP IT system; is concerned by the lack of detailed assessment of risk from financial penalties and the potential for up to £60 million in EU fines if the system is non-compliant; urges the Scottish Government to take swift action to develop a disaster recovery plan to cover the whole IT system; believes a clear plan for the transfer of knowledge to new staff must be developed, and is further concerned that the system will not be functioning as anticipated until 2018 at the earliest and will not deliver value for money.
It is always good to have the opportunity to debate agriculture in the chamber, but it is disappointing that, with so much potential for debate on the topic, the Conservatives have focused narrowly on one specific issue. I absolutely recognise the importance of the issue. Significant work is still required, as the response plan published today makes clear. Although improvements have been made, resolving the outstanding problems remains my foremost priority.
I want to focus my comments on the role of agriculture now and in the future, and on its positives. Agriculture plays a crucial role in our rural economy. There are around 52,000 farm holdings covering 5.6 million hectares. Barley is the largest crop, and there are 600,000 breeding cattle and 2.6 million breeding ewes. Since 2007, we have injected over £1,600 million into the rural economy, supporting over 21,000 projects. That is in addition to more than £400 million of direct annual support to farmers and crofters. Since 2015, we have supported 130 young and new farmers with £7 million in funding. Between 2007 and 2013, it is estimated that nearly 32,000 jobs were created. For every £1 spent, £2.30 was generated. Today, I announced the latest round of food processing and manufacturing grants, worth £5.8 million, to support butchers, food processors, pie manufacturers and farmers to invest in equipment, products, facilities and jobs all over Scotland.
The success of our agriculture sector was demonstrated only this week with the publication of the most recent food and drink export statistics, which showed that the value of exports has grown by 10 per cent compared to the same period last year. The statistics also make plain the importance of membership of the European Union single market, with the EU being the largest market outwith the United Kingdom for Scottish food and drink, accounting for 70 per cent, or £1,000 million, of our food exports alone.
All of that shows the precarious position in which we now find ourselves: an extreme Brexit, which would remove all the benefits that agriculture in Scotland currently enjoys, would have a devastating impact. That is why Scotland must be included in the Brexit negotiations. The reasons are practical, not political. We must protect the interests of our agricultural sector.
To deliver the best possible environmental and productivity outcomes, to keep people on the land—as we debated in relation to crofting yesterday, with people of like mind, such as Mr Finnie—to produce more food for ourselves and for export abroad and to support the development of the sector in the future, we need to maintain our share of funding and our access to people and markets.
It is important that we look to the future. Sustainability means growing markets. The recent achievement of BSE-negligible-risk status gives us the potential to grow the market for our quality meat sector. Sustainability also means supporting environmental enhancement. To date, the agri-environment scheme has invested £99 million in more than 1,500 projects, covering everything from enhancing biodiversity to protecting the water environment.
Farmers are increasingly innovating and collaborating to find their own solutions, such as monitor farms and co-operatives—just last Friday I visited Highland Grain in North Kessock, north of Inverness. Farmers and crofters already play a key role as the custodians of our land. They help to shape and protect that most fundamental and natural asset.
In the future, there is more that they—and all of us—can and should do to achieve the best possible environmental and productivity outcomes. Those are not conflicting but complementary aims.
European Union funding—or its equivalent—is vital for the continued viability and sustainability of Scottish agriculture. Our landscape, needs and priorities are different from the rest of the UK, as evidenced by the fact that 85 per cent of land in Scotland is less favourable, as opposed to just 15 per cent of land in England. That is especially the case for hill farmers, as evidenced in the testimony of many hill farmers and crofters at the two summits that I recently held in Lanark and Dingwall.
We must receive a 16.5 per cent share of future funding for agriculture. In the future, we expect the same amount of funding to be available as is available now. The power to decide how and in what to invest funding to achieve sustainable outcomes must rest in Scotland. We will only get agreement on the next steps through discussions based on mutual respect and by taking a new cross-party, all-Government, four-nation approach to the Brexit negotiations. In pursuing that objective, I undertake to work with all the other parties in the Parliament—as I always try to do.
I move amendment S5M-06186.4, to leave out from second “notes” to end and insert:
“; agrees that the biggest threat to Scottish agriculture remains the UK’s departure from the EU, withdrawal from the CAP and the loss of membership of the single market; recognises the need to develop a sustainable system of future rural support beyond 2020 that invests in and supports the best possible environmental and productivity outcomes for agriculture; calls on the UK Government to agree to continue to ensure that Scotland receives the same share of future funding as it does now under CAP to allow farmers, crofters and rural businesses to know as early as possible what financial support will be available, and believes that any further investment must ensure that the current CAP IT system is future-proofed to deliver such post-Brexit support.”
It would appear that there is no end in sight to this fiasco. The cabinet secretary in his first days in office said that it would be his top priority, but it appears that we are no further forward more than a year later.
There are a number of issues at stake: the impact on the public purse, on our farmers and crofters and on the rural economy.
I turn first to our famers and crofters. They have experienced difficulty in making claims and delays in receiving any money, whether it is substantial payments or loans. That has caused them to postpone plans for future development. All the while, the Scottish Government has put out press releases praising its investment in the rural economy—simply adding insult to injury.
I have spoken to people who are afraid to claim for a loan as they are not clear, under the new system, what their entitlement is and they cannot risk—[
I am sorry, Mr Carlaw, but you went bright red, so I thought that it was your phone. [
.] You will just have to stop blushing.
On you go, Ms Grant. I am sorry about that.
Thank you, Presiding Officer.
I have spoken to people whose development plans have been badly undermined and who have had to shelve plans to make their businesses more viable. That will impact on the rural economy for years to come. The knock-on effects from the fiasco mean that families are losing their livelihoods and going out of business.
I am absolutely aware of the difficulties facing individual farmers and crofters, but does Rhoda Grant recognise that the loan schemes that I instituted last November—earlier than the normal payment window of 1 December—injected about £270 million into the rural economy to farmers and crofters? That was at least a pragmatic and efficient act.
Nobody argues that the loans should not have been paid; indeed, they were a necessity to allow people to continue to function. Unfortunately, they were not the full payment, which means that a lot of people had to put their plans on the back burner—plans that were effective for those businesses to carry on.
Businesses that depend on the rural economy have also suffered. Even if they have managed to stay afloat, they face hardship for years to come to pay off debts racked up as a result. Even if the problem were fixed tomorrow, the consequences would last a long time. Money and resource need to be put back to support farmers and crofters as they try to pick themselves up again. They are vital, but public money once again has to be spent in the fallout from the mess. The Scottish Government needs to take responsibility for it, rather than shrugging its Teflon shoulders.
The fiasco also impacts on the larger rural economy: those who support farmers and crofters, such as people who improve buildings, fences and the like. Those maintenance and investment projects have stopped and small businesses are closing as a result, hitting the already fragile rural economy and delaying recovery, because those skills are lost. Far from investing in the rural economy, the Scottish Government has let it down.
Fergus Ewing might say that the system was not his choice as its purchase happened under Richard Lochhead’s tenure, and that is correct. However, he has had a year to sort it out and he has not even begun to make headway. I am clear that this is not a criticism of regional office staff, who have worked long and hard to try to get payments out and to help claimants. This is a failure of management. The fault ultimately lies with the Scottish Government that sourced the system and employed the contractor. Was due process carried out to make sure that they were up to the task? I have seen the secret report, and it does not give me confidence that the system will ever work. Will it simply limp on until Brexit renders it redundant? It is still costing the public purse, because amendments and changes to the system need to be paid for by the public, as do the loans required to keep farmers and crofters in business.
How long will the European Commission continue to overlook its failures? With Brexit, there is no need for them to keep us on side. Penalties will add to the cost of the whole project; at a time of austerity, it seems absolutely counterproductive that the taxpayer is shelling out and paying for this Government’s failure.
I acknowledge that the cabinet secretary has today published the conclusions and executive summary of the Fujitsu report, but it is time for the Government to be totally open with people about the extent of the issue and publish the full report, so that everyone can see what has happened.
That comment makes my point. If the report is so damning that it would call into question cybersecurity, it explains to people exactly what is happening.
We need a new system; I am not reassured that this one will ever work. It was a vanity project, and it is now time to admit defeat.
I move amendment S5M-06186.1, to insert at end:
“; is concerned that after a year in post the Cabinet Secretary for Rural Economy and Connectivity has not ‘fixed it’ as promised, neither has it been his foremost priority, and calls on the Scottish Government to fully disclose all information with regard to the fiasco, including the Fujitsu report.”
I start by setting out a few facts and statistics on agriculture in Scotland. Some 80 per cent of Scotland’s landmass is under agricultural production, which makes the industry the single biggest determinant of the landscape that we see around us. Scotland’s farmers, crofters and growers produce output that is worth about £2.9 billion a year. About 67,000 people are directly employed in agriculture, which represents about 8 per cent of the rural workforce and means that agriculture is the third-largest employer in rural Scotland after the service and public sectors. It is estimated that a further 360,000 jobs—one in 10 of all Scottish jobs—depend on agriculture. All of that highlights the important role that agriculture plays in relation to Scotland’s economy, landscape and people, and the fantastic job that our farming community is doing despite the SNP Government.
For far too long, the Government has been failing our rural communities. I have a degree of sympathy with the cabinet secretary, as I accept that he inherited this dog’s dinner of an information technology system from his predecessor back in 2016. At the time, Fergus Ewing said all the right things. He apologised to farmers and gave a commitment to getting this sorted. At the end of the day, that is where we need to get to. However, the cabinet secretary has totally failed to manage farmers’ expectations, which has left them with a distrust of him and the SNP Government and left total confusion and uncertainty across the sector.
Our farmers and crofters are paying the price for the SNP Government’s continued mismanagement of the CAP payments system. Last week, Audit Scotland published a report on the failed system, and the findings were not complimentary. The report found that
“the difficulties encountered in previous years continue to have a significant impact on the processing of current ... payments”.
It also said that
“To date, the programme has not delivered value for money” and that EU penalties
“of up to £60 million are possible”
for late payments.
Possibly most damning of all, the report said:
“it is likely that the rural payments system will not be functioning as anticipated until SAF 2018 at the earliest”.
We have a computer system that cost the Scottish Government £178 million to set up, whose cost is 75 per cent over budget, which requires additional costs to set it up—not to mention the potential payment of fines—and which probably will not work until 2018 or maybe later.
Not only has the Government failed to get a grip of this mess, but it risks being accused of attempting to cover up any further criticism. The Scottish Government will not release a report by Fujitsu on the IT system because it claims that the report is commercially sensitive. I am afraid that I do not accept the cybersecurity excuse that the cabinet secretary gave.
We saw what happened to the national health service recently when there were breaches of its IT system. The advice that the chief officer has given me, as the cabinet secretary with responsibility for the rural economy, is that releasing the report would risk similar cybersecurity breaches. Does Mr Carson not agree that it would be an act of sheer irresponsibility if I were to release information that could threaten the cybersecurity of our CAP IT system?
I think that the horse has possibly bolted because, as far as I understand the situation, the report has been leaked. I do not know what that says about security—cyber or otherwise.
Scottish Government officials confirmed that the report highlighted the need for remedial action and confirmed that there were system defects. It is totally unacceptable for any Government department to attempt to hide behind commercial sensitivity.
I urge the cabinet secretary to consider publishing a redacted version of the report. He should be transparent and allow proper scrutiny, so that we can get the computer system into a fit-for-purpose state. That is what the farming communities of Scotland want and deserve.
Where are we now? As of 22 May, about 1,700 of the 2016 pillar 2 payments, with a total value of £14 million, were still outstanding. The delay to starting pillar 1 payments has increased the risk that the deadline of the end of June will not be met. The fact is that the issue is about more than just meeting targets; it is about businesses managing their cash flow. Put simply, it is about farmers’ livelihoods. The delays mean that farmers cannot pay their debtors on time, that they do not have the funds to replace a piece of equipment that has broken down, that they cannot pay their staff and that they cannot make the prudent investments that businesses require to build a sustainable future.
I start by declaring a relevant interest. NFU Scotland provides me with its magazine,
Scottish Farming Leader, at no cost. The cover price is £3.50.
I thank the NFUS for that, which helps me to stay in touch, and I will come back to that. I also declare that I have a registered agricultural holding of less than two hectares from which I derive no income.
Leader helps us all to stay in touch. A different publication,
, caught the situation in which farming finds itself in relation to farm payments in its 10 February edition. It said:
“The department’s record of failure when developing systems to support subsidy payments to farmers does not inspire confidence in its ability to cope with the challenges with Brexit that lie ahead ... At the same time taxpayers continue to be hit in the pocket by financial penalties arising from the government’s failure to deliver the scheme properly.”
That those in England are also in difficulties does not let us in Scotland off the hook—far from it—but it allows us to compare the Tories’ rhetoric here with their record south of the border, which does not much favour my colleagues on the benches to my left. Westminster’s Public Accounts Committee is chaired by a Labour MP, and Tory MP Richard Bacon has been its deputy chairman. He was withering on the Tories’ record; in fact, he has even written a book called “Conundrum” on the nature and causes of overspending, delays and failures in his Government’s schemes and the failures of other Governments.
In contrast, our Government has fessed up and acted on legitimate concerns. A loan scheme has been introduced to protect the cash flows for farmers. In England, there has been no comparable action.
The motion asks us to note Audit Scotland’s June findings. Let us do that.
The report says that
“significant changes to leadership ... brought renewed effort to ... respond to the risks.”
Thank you, cabinet secretary.
The report continues:
“Online applications for 2017 opened on time on 15 March, and no major system problems were noted over the application period.”
Thank you, cabinet secretary, and t hank you to all the hard-working staff at the agriculture and rural economy directorate.
None of that should be news to Mr Chapman or to me. We were both present at a parliamentarians’ meeting with NFUS members that took place at Thainstone mart on 28 April, when w e both heard confirmation from active farmers that the application system was working and usable. That does not mean that the whole system is working, but the bit with which farmers interact was working.
We also heard that farm incomes had declined; we know of the serious pressures that there are. I welcome the assurance from the UK Government that funding for CAP will continue into 2020 but, in the light of the withholding of more than £100 million of convergence funding, I am a bit sceptical about the outcome.
Today’s Queen’s speech at Westminster said that the Government hopes to
“maintain the scope of devolved decision-making powers immediately after exit” and refers to
“discussion and consultation with the devolved administrations on where lasting common frameworks are needed.”
An agriculture bill has been proposed, and I am going to be quite radical. Why not have a joint committee between this Parliament and the Westminster Parliament to look at that bill?
As a computer person, I will make an important point on back-up systems, on which Peter Chapman is entirely wrong. It is only the heritage or legacy systems that are not backed up, not the new CAP system and all the data, which confirms that it will be okay.
I end with July’s edition of
Scottish Farming Leader
I have here. It has 66 pages and not a single word on CAP information technology systems or any of the failures. Farmers have moved on and the Government is moving on with them.
What a pity that we have, rightly, had to focus on the CAP delivery system both in the Tory motion and our amendment, instead of focusing on the future of agriculture more broadly. It is extraordinary that we have had to debate the CAP delivery system yet again. The abject failure to fix so many of these issues has put our farmers under prolonged financial pressure and it is deplorable that they continue to pay the price of this Government’s mess.
In February 2016—a desperate point for farmers in Scotland—I met members of NFUS Forth and Clyde on-farm at Crawfordjohn in my region. At that time, many spoke of the stress that they were under and raised concerns about the mental health and wellbeing of farmers and their families. At that meeting, I heard of seed merchants suffering a loss of business and farmers struggling to meet hire-purchase payments.
Yet this very day, Tom French, vice-chair of the Clydesdale NFUS branch discussed with me the difficulties of restricted cash flow and its obvious effects on confidence in the supply trade and on farmers’ ability to pay their accounts. Farmers in my region have told me that extended credit arrangements have contributed to several businesses downsizing and to some stopping trading altogether.
The Government’s CAP failings have taken a huge toll on not just farmers awaiting payment, but the whole rural economy. Rural representatives well know the variety of factors that have made rural economies more fragile than their urban counterparts through the years. This Government-imposed disruption has had a serious knock-on effect.
In March 2016, the then Cabinet Secretary for Rural Affairs, Food and Environment said in the chamber:
“Are we going to ensure that all the payments get out? Of course we are.”—[
, 10 March 2016; c 16.]
Since then, the current Cabinet Secretary for Rural Economy and Connectivity has repeatedly assured us, on behalf of the Scottish Government, that “We are fixing it”.
Here we are today. I understand from talking to local people that some of the 2015 payments are still outstanding and that we have an uneconomical system that is riddled with problems.
I am afraid that that is no comfort to my constituents.
It is heavily disappointing to learn that the functionality to process pillar 2 claims had to be deprioritised in favour of processing pillar 1 payments, important though those are. Furthermore, the integration of the remaining pillar 2 schemes with the rural payments system was removed from the programme’s scope. It is chaos, which is so discouraging for farmers looking to invest in agri-environment and forestry schemes.
I find it concerning that the Scottish Government has still not established a disaster recovery arrangement for the whole CAP payment process. These systems are at risk and the Scottish Government’s reassurances are no comfort without proper testing and plans.
We must commend the staff who continue to work through challenging circumstances. Anyone can empathise with the prospect of facing a day at work with impending deadlines and backlogs of work. The level of pressure is enormous. The further update from Audit Scotland notes:
“the time pressure the programme was working under and the decision to make payments quicker had meant some governance practices, such as system documentation and quality controls, had been sacrificed.”
Staff should not be working under such pressure. That level of pressure is unacceptable and the structures and processes of the work environment should be monitored closely. I hope that the cabinet secretary will comment on that.
The cabinet secretary said that he would fix this mess. Effective delivery is long overdue. How much longer does rural Scotland have to wait?
I have no problem noting the findings of the Audit Scotland report, which accurately reflects the situation. However, much of what we have heard does not accurately reflect what was in the report. We had the appropriate balance from Stewart Stevenson in his speech.
That an IT project is in disarray—not that I accept that the present situation is one of disarray—is not news in the public sector. What is important is the scrutiny that takes place. In the short time that I have I will talk about the Rural Economy and Connectivity Committee’s scrutiny.
There is no doubt that a problem has been identified. Has it been acknowledged? I heard it acknowledged today and it is certainly acknowledged in the Scottish Government’s amendment, as it was in previous debates.
Is it the result of neglect? No. Is it the result of a wilful act? No. Is there a lack of oversight on this issue? It is quite clear that Audit Scotland does, and has done, in relation to this matter what it does across the public sector, which is vigorously scrutinise what has happened.
Did the Rural Economy and Connectivity Committee get weekly updates about the state of payments? What we are interested in is the mechanisms that are put in place to ameliorate any problems. We have heard about the commendable staff effort, and it is gratifying to hear a range of members talking about that.
There is also the loan scheme. Is anything perfect? No, but that was a positive step. The previous system was not perfect, and I dare suggest that future systems will not be perfect either. It is a matter of understanding.
I do not have sufficient IT knowledge to comment in detail on such things but, if an expert tells me that there are issues of security, I am inclined to listen. The problem is that the current system of subsidies is overly complicated. That has created part of the administrative burden and that is why the development of the IT system was so problematic.
Much of that is distracting from the real challenges in Scottish agriculture, which are about not the sorting of a computer system, but the long-term implications for Scottish agriculture of being outside the European Union. The UK Government has promised to maintain the current CAP funding until 2020, but there are no published plans beyond that. Indeed, there is no guarantee that the IT system being debated today will deliver any post-Brexit subsidy scheme that deviates from the existing CAP model.
On Friday it will be one year since the EU referendum and 12 weeks since article 50 was triggered. This week marked the start of official negotiations with Europe. What will we replace CAP with? That needs to be discussed, debated and scrutinised—and not behind closed doors. There has to be collaborative working between Westminster and Holyrood on that, and I believe that there will be. However, in focusing so heavily on an IT system that is specifically designed to deliver CAP, we risk tying ourselves into a like-for-like replacement of CAP and failing to address the inadequacies and complexities of the existing system.
Business as usual for CAP would be a missed opportunity. Area-based payments, which make up the bulk of pillar 1, continue to reward land ownership rather than sustainable land use. That drives up land prices, and it is one of the key barriers to further land reform.
The Scottish Green Party wants to move forward on the principle of public money for public good.
In the short time that I have left, I wish to say that leaving the EU provides an opportunity to simplify the subsidy system and to ensure best value for public money—public money for public good. That will not necessarily result in cutting funding to crofters—of whom we do not hear terribly much—farmers and rural businesses.
What is most important is that Scotland’s voice is heard in the negotiations.
Sixty-three thousand people are directly employed in agriculture in Scotland, but more than 1 million people live and work in rural communities that benefit indirectly from European support for our agricultural industries.
I have another figure for you, Presiding Officer: £1 billion. That is the value of EU support that has been due to Scottish farm businesses since the Scottish Government’s debacle over basic payments began more than two years ago. That is money that those working on farms and crofts across the country plan to use years in advance to employ workers, to rent and buy equipment and services and to buy seed and feed for the coming season.
Despite the Scottish Government’s refusal to make a full assessment of the damage to our rural economy, we are now starting to see the depth of its catastrophic handling of farm payments. Payments have been delayed by six months or more, there has been a decrease of 48 per cent in farm incomes, 6,000 farm businesses are still to have their payments processed, a third of farms in Scotland are operating at a loss, and more than £100 million of support payments are still sitting in the Government’s bank account. John Finnie is saying that nothing is perfect.
I have only got another two minutes—I am sorry.
I have no doubt that the minister inherited a complete mess from his predecessor, but I am also certain that more could have been done over the past year to right those wrongs. In the words of the recent Fujitsu report, a report that the minister requested should not be made public, but which was covered at the committee,
“many quality assurance and governance practices have been knowingly sacrificed”.—[
Official Report, Rural Economy and Connectivity Committee
, 10 May 2017; c 23.]
We said that in committee.
This afternoon, the Scottish Government has published parts of the Fujitsu report. In his covering letter, Mr Ewing says that it is a fair and balanced synopsis of the report. It is, however, no such thing. Nowhere does the synopsis say that
“many quality assurance and governance practices have been knowingly sacrificed”.
Anyone who reads this travesty of a synopsis of a report will see that it is not balanced, and I, for one, refused Mr Ewing’s offer of a private—or secret—briefing to the committee, because it was wrong. This should be in the public domain, and it is completely wrong for the Government to operate in such a closed fashion.
For the past two years, this Government has presided over a systematic and inept mishandling of vital support for our rural economy and has shown a complete disregard for our rural communities. When he was first appointed as Cabinet Secretary for Rural Economy and Connectivity, Fergus Ewing told the chamber that there would be no repeat of the 2015-16 CAP debacle. In that speech, he said:
“The farming industry needs to have confidence in the payment timetable and that we will do what we say. There must be no repeat of the problems that were faced in 2015-16.”—[
, 31 May 2016; c 5.]
Can the cabinet secretary honestly say that he has delivered on his promise? Can any observer say that the Government has delivered on it? I wonder whether our farmers and the Scottish taxpayer will agree. Millions have been paid out in fines for payment errors, with more fines of up to £60 million on the way for missing this year’s deadline for payments—a deadline that is only nine days away.
First, I declare an interest as a partner in the farming business of J Halcro-Johnston & Sons as well as the owner of a croft.
It is with great pride that I make my maiden speech as a member of this Parliament and as a representative of the Highlands and Islands, an area that includes my own home of Orkney. I am particularly delighted that my parents have been able to make it here today. Like, I am sure, the families of all politicians, they have experienced the highs and lows of my political involvement just as much as I have, and they have always been a great support to me. It was my father who inspired me to become interested in politics. Although we have not always agreed politically, he was, as a member of the Scottish constitutional convention, part of the process that brought the Scottish Parliament into being, and I am proud now to be a member in the chamber that he and others helped bring about.
I also pay tribute to my predecessor on the Highlands and Islands list, Douglas Ross, who is now the MP for Moray. His fantastic win is testament to the hard work that he has put in first as a councillor and then as an MSP for that area. It is a clear indication of the esteem in which he is held by local people in Moray, and I know that he will continue to work hard for them as their MP. I will avoid describing him as a rising star—it is an accolade from which few politicians recover—but I know that we all expect big things of him in the future and I look forward to working with him in my new role. Finally—and I am sure that I speak for my colleague Tom Mason, too—I thank David McGill, his team and all those who have made us both feel so welcome yesterday and today.
Although I am a new member of the Parliament, these surroundings are not unfamiliar to me, and it is great to see so many familiar faces among both the MSP and Parliament staff. Between 2003 and 2007, I worked as press officer and adviser to various Conservative MSPs including Ted Brocklebank, Brian Monteith, Bill Aitken, Mary Scanlon and Jamie McGrigor, and I thank them all for the opportunities that they gave me back then. I must congratulate Mary Scanlon on recently being awarded the CBE, which is a fitting tribute to her contribution to political life in the Highlands and Islands and to the Parliament. [
.] I also congratulate Jamie McGrigor, who has recently been elected as a councillor in Argyll and Bute and will continue to serve his constituents.
When I last worked here, times were very different for the Scottish Conservatives. The only wins that we celebrated in Scotland were our victories in the annual tug-of-war competition. Our three years as undefeated champions were testament to the hard work and dedication of our team, which of course included the late and much missed Alex Johnstone. Alex and his wife, Linda, were always extremely supportive to me as a young candidate when I stood in my first election and I am saddened that I will not be able to serve here with him as my colleague—or, indeed, with David McLetchie or Dave Petrie, two other Conservative parliamentarians who were taken from us too soon.
The area that I now represent, the Highlands and Islands, is vast, and the challenges that it faces are many and diverse. Even within the agricultural sector, the needs of someone farming in Shetland or in Orkney can be very different from the needs of someone farming in Moray, Ross-shire or Caithness.
However, a strong agricultural sector is vital for wherever people live in the Highlands and Islands. Even if a person is not directly involved in the sector, it is likely that they will know somebody who is. Those people are our friends, our family and our neighbours.
Scotland produces some of the finest produce in the world and the Highlands and Islands produce some of the finest produce in Scotland, but that needs to be supported and nurtured. Proper transport links are needed to get our food to markets, and producers need to receive a fair price for their goods. Local government and business need to support local producers by sourcing and promoting local produce and, of course, rural payments need to be paid on time. The Scottish Government’s mismanagement of farm payments has meant real difficulties in the present and concerns for the future. It has left some farmers with severe cash-flow problems and has put financial pressure on the agricultural sector in general.
The past few years have not been easy, but I believe that there is a bright future for our farmers and those who support the sector. That is crucial if we want to attract the next generation to take up the mantle and be the farmers of tomorrow. As an MSP, I look forward to working with farmers, crofters, representative groups, producers and other stakeholders across the Highlands and Islands over the next few years.
I will finish on how I hope politics will change in our country. The anniversary of the murder of Jo Cox was last week. We should all agree on the sentiment that has come to the fore since her death: that often we, as politicians, agree on far more than we disagree on. I hope that, over the next few years, we will see a normalising of Scottish politics again and that our focus as parliamentarians can be on the needs of our constituents, not on the constitution, and on how, working together, we can do better for them. [
I remind members that I am the parliamentary liaison officer to the Cabinet Secretary for Rural Economy and Connectivity.
I welcome the opportunity to discuss the CAP futures programme and to acknowledge the difficulties and challenges that delayed payments have caused the farming industry. We cannot go back; we must go forward. As the First Minister said in the chamber last week, there is not a shred of complacency on the Government’s part with regard to tackling the issue and ensuring that the system delivers, as farmers have a right to expect it to.
In 2016, a number of countries had problems with making CAP payments on time—so much so that the European Commissioner for Agriculture and Rural Development announced an extension to the deadline. England went through its troubles with the common agricultural policy back in 2006 and 2007, when it moved to a regionalised model. According to a recent report by the Public Accounts Committee, which examined delivery of the CAP in England, there are still significant failings in that system. That report concluded that the Department for Environment, Food and Rural Affairs had failed to assess the effect of delayed subsidy payments on farmers and had not done enough to mitigate the implications.
As Audit Scotland’s report noted, the CAP futures programme has operated in a “challenging external environment”, as
“EC requirements were not fully agreed before the programme needed to start”.
Additional system complications were created by decisions that were taken in the middle of 2014 to accommodate the industry’s requests to have three payment regions.
Despite the failings, the cabinet secretary has taken repeated measures to ensure that farmers do not lose out financially. Application periods have been extended to help to maximise the number of farmers who apply and to give them additional time to do so. Where it has been determined that meeting targets to pay farmers was not achievable, the Scottish Government has taken steps to minimise disruption by making payments in two stages rather than waiting until the system was ready to dispense any money.
I have only four minutes, so I will not take any interventions.
Less complex claims have been dealt with first to speed up the process, and the Scottish Government used more than £270 million of its own budget to pay farmers as speedily as possible by introducing interest-free loan schemes.
There is a lot more to do, but I welcome the fact that Audit Scotland’s updated report recognises a wee bit of the progress that has been made. I know that the Scottish Government will now carefully consider the findings in the context of the significant improvement activity that is under way.
As the cabinet secretary states in his amendment, the biggest threats to Scottish agriculture remain the UK’s departure from the EU, withdrawal from the CAP and the loss of membership of the single market. However, the SNP Government will focus on protecting Scottish farmers post-2020.
The involvement of representatives from around the UK at Brexit talks is crucial. Today, the newly appointed UK rural affairs secretary, Michael Gove, was due to chair the EU transition forum, at which UK farming ministers discuss the future for the industry after Brexit, but he decided not to attend.
I fully realise the impact that failings in the delivery of CAP payments have had on farmers. The president and vice-president of NFU Scotland both farm in Galloway, which is in my region, the south of Scotland. I reassure farmers that the Scottish Government will continue to work flat out and I will continue to listen to farmers and to support them, if needed.
It is safe to say that I am a city girl, but I am always willing to learn and I pay tribute to the NFU Scotland members in my constituency who, over the years, have tried terribly hard to educate me. I now know the difference between tups and yows. I have spent time on local farms and I have grown to understand just how hard-working and creative local farmers have had to be over the years. They have had to diversify, challenge the supermarkets when milk prices have been less than the cost of production, and work with really tight margins. They have my complete respect and they do not deserve to have others fail them.
Let us be clear: it is the third year in a row that the IT system that was designed to make the payments has been in trouble. Although the loan scheme that was put in place is very welcome, it is there only because of the Government’s failure.
I always listen very carefully to what Fergus Ewing says, and I know that he inherited the mess, so I have a degree of sympathy for him. As we have already heard from others, he might be a man of few words, but he makes them count. In May 2016, he said:
“On behalf of the Scottish Government, I address three simple words to all farmers and crofters who have suffered as a result: we are sorry. Let me follow that up with four further words: we are fixing it.”—[
, 31 May 2016; c 3.]
That is a direct quote. It was to be his first and foremost priority. He told us that he would do three things: complete the 2015 payments; deliver compliance and minimise any financial penalties; and see the 2016 payments placed on a proper footing. He was going to oversee and drive forward work to get things back on an even keel. Sticking with the cabinet secretary’s fondness for brevity, let me say three words to him: you have failed.
We have a follow-up report from Audit Scotland that does not make for very positive reading. The programme that originally cost £178 million is now likely to cost an additional £33 million and there are potential fines of £60 million. Audit Scotland was being unduly kind in the report when it said:
“To date, the programme has not delivered value for money.”
That passes as understatement of the year.
The independent technical report that was commissioned by the Government is shrouded in secrecy. Members of the Public Audit and Post-legislative Scrutiny Committee and the Rural Economy and Connectivity Committee were given a private briefing, but it should be available for the entire Parliament to scrutinise. I know that the cabinet secretary is trying to make the information available and he sent an email including it to both committees today, which is welcome. However, given that the entire report is in the hands of
, he should consider full publication for the Parliament. I suspect that it is a case of too little, too late.
Farmers and crofters have been ill served by the Government in its mishandling of the CAP futures IT programme. There has been a breathtaking level of incompetence and farmers are no clearer about whether payments will arrive when they should in 2017. That is the case across a number of schemes. In the less favoured area support scheme, payments of £12 million are outstanding, and in the hill sheep scheme, payments of £6 million are outstanding. I could go on, but I suspect that the Presiding Officer will not let me.
The SNP needs to get a grip. I will leave members with the words of someone whom I do not often quote, who said:
“We are talking about public money and people’s livelihoods. We need something far better. This performance is not acceptable.”—[
Official Report, Public Audit and Post-legislative Scrutiny Committee
, 8 December 2016; c 12.]
That was Alex Neil in December 2016, and he was right.
I have found the debate interesting, even if it has been difficult, at times. I echo other members’ congratulations to Jamie Halcro Johnston on his excellent dignified maiden speech. I am absolutely certain that he will make his influence felt here and beyond—and not just in the tug-of-war team.
I have listened with care to the speeches of members from across the chamber, and it behoves me to reply to the main points that have been raised. I am cognisant of the fact that, as Mr Finnie pointed out, I will appear before the Rural Economy and Connectivity Committee next week as well, to respond—as is my duty—to individual questions. I think that I have been as transparent as possible in attending the Rural Economy and Connectivity Committee and answering its questions.
I will deal first with the CAP IT programme and the issues that members have raised about the Audit Scotland report and the Fujitsu report. I welcome the Audit Scotland report, which underlines what I have said on many occasions: we still have work to do. I have been transparent about that and I point out that precise information about the performance on payments is made available to Parliament weekly—and rightly so.
The Auditor General’s report notes that “significant” progress has been made over the past year, so I think that it is reasonable for me to narrate some of that progress in order to present a balanced picture. According to the Auditor General, “significant” and positive changes have been made to the leadership and governance of the programme. I know that because I ordered them. The team has changed and the governance has changed.
Secondly, there has been progress on managing the contracts, as the Auditor General acknowledges. I have met Steve Thorn in person or digitally through videoconferences on numerous occasions—five occasions, I believe. Those discussions and work that officials have done have resulted in a £4.4 million reduction in costs to the taxpayer.
Thirdly, the Auditor General recognises—Stewart Stevenson was the first member to point this out in the debate—that there has been increasing success with the online single application form process, which is functioning properly.
In addition, we are making progress on payments, as I said in my intervention on Claudia Beamish; more than 99 per cent of basic payment scheme 2015 payments have been made. In every year, there is a tail of applications that cannot be met, for one reason or another—this year, the tail has been bushier. However, that is no excuse for not ensuring that our job is done. I think that Rhoda Grant credited me with having “Teflon shoulders”, which is an amusing phrase. I do not shirk responsibility; I intend to see the job through. We are making progress on payments, but we are not there yet.
I disagree with some parts of the Auditor General’s report, and I have made that clear to her. For example, the figure of £60 million that is cited on penalties and disallowances is entirely speculative, as the report notes, just as the figure of more than double that that was cited last year was entirely speculative.
I do not think that I can. I am very sorry, but I have a lot to cover. I will see Mr Chapman in committee next week.
Members have mentioned the Fujitsu report. I want to publish it in full, but I cannot because of advice that I have received that to do so would threaten cybersecurity. I have complied in full with the approach that was suggested by Jackie Baillie, as convener of the Public Audit and Post-legislative Scrutiny Committee, who asked me either to publish a redacted version or a summary of the report’s findings. Today, we have published the key findings, so I have complied—
If members read the letter from the convener of the Public Audit and Post-legislative Scrutiny Committee, it will be clear that I have complied exactly with what I was asked to do.
However, the technical experts’ report noted that the IT infrastructure is fundamentally sound.
There are many more things that we need to discover. What happens in the event of Brexit? What about the points that John Finnie and Emma Harper made about the challenges that face the rural economy? What about the convergence funds that are due to Scotland—the £191 million that has not been passed on by the UK Government? I raised that issue with Mr Gove yesterday and he has undertaken to reply to me on it.
My time is drawing to an end, and I apologise to members for not being able to answer all their questions. I will do so next week; that is my job.
Let me say this: we are in the course of fixing the problem and we have made substantial progress. The technical experts’ report has said that the system is fundamentally sound. The system delivered more than 99 per cent of applications last year and it proceeded with the applications on time. It is helping us to make loan payments, which members have welcomed. We are fixing the system, although the job is not done yet, and I fully intend to accept my responsibility and to see the job through.
I refer members to my entry in the register of members’ interests, in relation to my farming interests, and I confirm that I do not receive any rural farm payments.
Before I talk about the failures of the SNP, the Scottish Government and Fergus Ewing in relation to CAP payments, I welcome Jamie Halcro Johnston to Parliament and congratulate him on his fantastic maiden speech. As a proud Orcadian, he will be a welcome addition in standing up for our rural and remote communities, and his presence due to the election to Westminster of Douglas Ross is a clear message of dissatisfaction with the SNP’s performance in Moray. That must make former cabinet secretary Richard Lochhead justifiably nervous, given today’s debate.
On CAP payments, here we are again. We have had a five-year project and two cabinet secretaries, and we are still no closer to a functioning payments system—I summarise the speeches of Rhoda Grant and Jackie Baillie. That is why we will support the Labour amendment.
In its most recent report, Audit Scotland concluded that we face the risk of EU fines because the system is not compliant. Fines can be administered for failing to make the required payments within set timescales, for misinterpreting or breaching regulations, and for weaknesses in financial and administrative controls that are considered a risk to EU funds. There is a real risk of that occurring.
To say that a system that cost £178 million and managed to come in 75 per cent over budget has not given us value for money would be an understatement. Of course, Audit Scotland warned the Scottish Government that it would not deliver value for money, but the Scottish Government—unsurprisingly—refused to listen. The most recent figures, which were provided on 9 June, show that 6,725 applications were still to be processed. All that leads to one thing: additional costs.
We are left with a system that has merely been papered over, as the structure of payments collapses underneath it. Farmers are still left without a significant amount of pillar 2 money from 2015. Around £14 million is currently sitting in Bute house rather than in the Broch, Barra or the Borders.
As my colleague Peter Chapman said in his opening speech, the Scottish Government is at risk of fines of £60 million from the EU, but the First Minister does not seem to be overly concerned. Why? That is enough to pay for more than 2,000 teachers for our rural schools, which are crying out for staff.
In the debate, we heard from Stewart Stevenson, who as usual was more concerned with Westminster than with the matter at hand. We heard from Claudia Beamish, who talked about the important consequences of the Government’s failure, from businesses failing to the mental health of farmers—a subject that is not discussed nearly enough.
We heard from Emma Harper, who acknowledged that the Government will consider the report. I hope that it does so soon, because it is anticipated that the rural payments system will not be fully operational until 2018, at the very earliest. That means that this time next year we will be realising Mike Rumbles’s fears and having the same debate again. We will again be asking the Scottish Government whether it has done any work on a penalties assessment, we will again be asking the Scottish Government whether pillar 2 payments have been made, and we will again be asking the Scottish Government whether it has had to paper over the cracks with short-term loans. Finlay Carson summed up the fiasco well when he said that
“Our farmers and crofters are paying the price for the SNP Government’s continued mismanagement”.