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Agricultural Support (Post-Brexit Transitional Arrangements)

– in the Scottish Parliament on 20th June 2018.

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Photo of Linda Fabiani Linda Fabiani Scottish National Party

The first item of business is a statement by Fergus Ewing on the future of Scottish agricultural support—post-Brexit transitional arrangements. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Scotland did not vote for Brexit, but we will have to deal with its consequences. The Scottish Government’s preferred option is for the whole United Kingdom to remain in the European Union. Failing that, our consistent position has been that staying in the European single market and the customs union is essential for Scotland’s economy and particularly our rural economy. That would enable us to continue to benefit from the four freedoms—the freedom of movement of goods, services, people and capital—and from a wide range of environmental, animal, plant and food standards, but it would mean that we were outside the common agricultural policy.

In recent months, a wide range of stakeholders have promoted the prospect of change. One of the central conclusions of the agriculture champions was:

“No change is not an option.”

That premise also featured strongly in the discussion paper that the national council of rural advisers published last week. It said:

“Now is the time to change the way we think, act and operate to tailor bespoke policy frameworks.”

The title of NFU Scotland’s discussion document on a new agricultural policy for Scotland post-Brexit is simply “Change”.

Change therefore seems inevitable; what we must determine is how far we go and—which is important—how fast. We must navigate our future through a bewildering set of uncertainties. We do not yet know when we might be made to leave the EU—that might be on 29 March next year, at the end of 2020 or at some date that is as yet unknown.

There is little clarity about funding. We have a commitment from the UK Government that it will provide the same cash total in funds for farm support until the end of the current UK Parliament, and that contracts that are entered into before the end of March next year will be honoured. We are said to be leaving the EU on 29 March 2019, but we have no idea what will follow.

That is not all. Time and again, Cabinet colleagues and I have sought additional information about funding guarantees but it has not been forthcoming. Perhaps worst of all is the prospect of being denied control over or access to the powers that were hard won in the devolution settlement. Those powers matter hugely for rural Scotland, as they would enable Scotland to design its own solutions for funding and policy to meet Scottish needs in farming, food production, food standards and the environment.

The clock is ticking. We can no longer wait for Westminster but must get on with determining our future. Scotland’s wellbeing might mean nothing to Westminster, but it is our central and overriding concern.

Rural Scotland deserves security and stability in the short term, so I am today launching a consultation on proposals to provide stability and security for rural businesses in the immediate post-Brexit period. It marks the start of the process of developing a new rural support policy for Scotland.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The consultation also forms part of the civic conversation that the national council of rural advisers will lead over the summer to shape a comprehensive new approach to supporting Scotland’s rural economy.

The consultation focuses on what might be done to provide stability in the period immediately after Scotland might have to leave the EU in 2019. It sets out ideas for short-term simplifications that could help current claimants of CAP-related support while improving or enhancing the delivery of policy goals. It asks questions about how best to support agriculture and integrate it into the broader rural economy over the transition period and beyond. It also seeks views on how pilot projects might be developed to test different approaches to rural support that might be taken forward. It is not an entirely open-ended consultation, however, as I am clear about what the key proposals should be and that the proposals should aim to deliver stability and security for businesses and communities.

The plan proposes that we have a transition period. The agriculture champions’ recommendation and rationale for a three-year to five-year period is compelling. Such a transition period would provide the space that we need to properly develop and devise a new and different approach for Scotland, which is in stark contrast to the one-year transition period that is currently proposed by the UK.

I propose that, within the five-year window, we have a two-year period of stability in which we continue to adhere to EU rules. I envisage that, during that initial phase, current EU support schemes will remain largely the same and provide security where it is needed most. That security will be enhanced for more than 11,000 farmers and crofters by my decision to also maintain the less favoured area support scheme in 2019 at 80 per cent, ensuring that our most marginalised farmers and crofters continue to receive the support that they need.

I propose to make some amendments to payment schemes in the second phase of the transition period to simplify and improve customer service, to provide enhanced public benefit and to make it clear that we are not standing still during that crucial period.

I want to explore and consider income parameters for farm payments, but I also want to declutter the payment landscape by removing penalties for minor indiscretions. Such an approach signals a key shift in mindset and attitude away from strict compliance towards a relationship that is based on trust and that values and supports delivery that is based on outcomes. I also want to reduce the administrative burden with regard to a range of steps in the payments system and process including inspections, mapping and scheme rules. Further, I propose that we use that time to streamline and synergise some of the myriad pillar 2 schemes.

Those measures will free up resource, in its widest sense, to be invested more in activities that we do now that we will want to continue in the future. For example, we already want to support more new and young entrants into farming and food production, so we will want to continue providing support in that area. However, we will also utilise resources to innovate and to develop and pilot new approaches. As well as encouraging new and young entrants, there are intergenerational challenges that we will need to address.

During the consultation, I want to hear views on the longer-term direction of travel. All ideas and proposals will be explored as part of the wider civic conversation on how best to sustain a vibrant and flourishing rural economy in the future. Key to that will be exploring how best to combine delivery of desirable outcomes for rural Scotland with support in the future. A new rural policy framework should seek to ensure that public investments in social, economic and environmental capital not only create a stable and secure environment for rural businesses but contribute to a sustainable, productive, diverse and thriving rural economy.

There is no doubt that the next few years will be extremely challenging for rural Scotland. However, unlike the UK Government, which becomes more chaotic and clueless by the day, this Government is focused on its responsibilities to protect and serve the best interests of the people and businesses in our rural communities. Since the EU referendum, almost two years ago, the UK Government has provided little clarity and almost no certainty. With less than a year to go to a Brexit that Scotland neither voted for nor wants, we cannot wait any longer. Rural Scotland needs and deserves as much security and stability as can be provided in the short term, and today I have published a plan to achieve that.

The Deputy Presiding Officer:

The cabinet secretary will take questions on the issues that have been raised in his statement. I intend to allow around 20 minutes for that before we move to the next item of business.

Photo of Donald Cameron Donald Cameron Conservative

I thank the cabinet secretary for advance sight of his statement, and I refer to my declarations on crofting and farming in the register of members’ interests.

It was with a sense of irony that I heard the cabinet secretary say that the Scottish Government feels that it can no longer wait and that we must get on with determining our own future, given that every Opposition party in the chamber has been urging the Government to stop dithering and get on with outlining its plans since the Brexit vote almost two years ago.

This is the third ministerial statement in as many weeks, and until now it is the Scottish Government that has provided little clarity and almost no certainty. It is only after pressure from the Scottish Conservatives, a day before the Royal Highland Show, that the cabinet secretary has finally been forced to make a statement to Parliament.

That said, we welcome this consultation about transition. We will take time to digest the proposals. Where there is common ground, we will seek to find it. Our priorities for support are that the UK internal market is protected and that the support concentrates on production from active farming, protects our environment and recognises that 85 per cent of farmland in Scotland is in less-favoured areas.

My questions to the cabinet secretary are these. First, in the light of the documentation of the last three weeks, will he commit to holding a proper debate on this subject, in this chamber, as soon as possible after recess? Secondly, given the concerns that NFU Scotland expressed yesterday about the European Commission’s approach to LFAS, does he recognise that caps on LFAS of 80 per cent in 2019 and of potentially 20 per cent in 2020 will be a significant blow to many of Scotland’s livestock farmers?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

In response to the questions that Mr Cameron asks, I am happy to debate those matters—that is right. There is a question about the timing of a debate, as it would benefit us to have the responses to the consultation document—the document that I have here, which will be consulted upon. I propose, however, subject to the parliamentary authorities, that a debate be had. That is a positive suggestion and I entirely agree; it is something that we would do anyway.

I am sorry to disabuse Mr Cameron of his notion of the efficacy of the Scottish Conservatives, but we have in fact been working on this for several months, as I hinted when I gave evidence to the Rural Economy and Connectivity Committee, and as I think that any member would expect.

As far as LFAS is concerned, the European Parliament happily postponed the operation of the 80 per cent limit, and therefore we maintained LFAS at 100 per cent this year in Scotland. It will go down to 80 per cent, but it is completely unacceptable that it go down to 20 per cent the year after. The consultation paper sets out proposals and asks how we avoid that coming to pass. It is essential that we support our hill farmers. I am pleased that Mr Cameron has raised this matter, and I intend to press the point with Mr Gove when I see him at the Royal Highland Show tomorrow.

I am pleased that the Conservatives have recognised that this is a serious document. I think that it will be broadly welcomed by many farmers precisely because it offers stability of continued income. It is, of course, dependent on the UK Government playing its part and delivering on its promises that, post Brexit, it will deliver—and at least match—the EU funding that we came to acknowledge as necessary.

Photo of Colin Smyth Colin Smyth Labour

I thank the cabinet secretary for advance sight of his statement. Today’s statement is long overdue but it is also welcome.

I agree with the cabinet secretary that, in the current constitutional chaos, there remains a lack of clarity from the UK Government on areas such as policy funding, devolution, access to EU labour and trading conditions.

The reality is that, for months, organisations such as the NFU and Scottish Environment LINK and Governments such as the Welsh Government have been leading the way by setting out what they see as the key principles for rural and agriculture support post-Brexit, but the Scottish Government has been left standing.

There is much in the statement that I welcome and agree with, such as a stability period of two years and a commitment to declutter the payment landscape, but, as the cabinet secretary said, the clock is ticking. Will he give a clear commitment that the consultation will be carried out on a timely basis and that firm, detailed proposals will be set out as soon as possible? Rural businesses and communities need to start to plan now, and the lack of clarity is already damaging our rural economy.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Being an optimist, I will interpret that broadly as a welcome. To be serious, I will say that the plan sets out a very clear set of proposals. It sets out that farmers, in a stability period for the next two years, would, broadly speaking, continue to receive the payments that they have received under pillar 1—the basic payment and the other payments.

It then suggests that there should be a further three years in which we should proceed along those lines but then seek to introduce improvements and changes. I think that that mix of stability, certainty and simplicity will be broadly welcomed by farmers in Scotland.

Having read the other documents that have been published by the UK Government and other bodies throughout the UK, I have to say that our document is—as far as I am aware—the most detailed plan that exists on Brexit, and that is because we have spent several months working on the need to replace the uncertainty of the current time with certainty over a period of not one year, as Mr Gove proposes, but five years. If I am right, farmers will think that the five-year transition will give us the time to prepare for the change that I think that most commentators regard as necessary.

The Deputy Presiding Officer:

A lot of members want to ask questions, so I ask people to get straight to their question and I ask the minister to give short answers, where possible.

Photo of Kate Forbes Kate Forbes Scottish National Party

As, I know, my constituents will, I welcome the cabinet secretary’s commitment to more than 11,000 farmers and crofters with his decision to maintain LFAS at 80 per cent next year.

Does the cabinet secretary agree that any move to pay LFAS at 20 per cent for 2020 would be severely detrimental to crofters and farmers, many of whom have made that clear to me? Further, will he commit to exploring options to ensure that our most marginalised farmers and crofters, many of whom are in my constituency, continue to receive the support that they need?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Kate Forbes represents much of Inverness-shire and Ross-shire. Many hill farmers in those areas, in my constituency and, indeed, throughout the 85 per cent of Scotland that is covered by LFAS rely on those payments. As I said, LFAS going to 20 per cent is completely unacceptable.

I remind members that Scotland is the only part of the UK that has continued with LFAS—I think that that has been the case for around seven years.

Page 13 of the consultation paper says:

The Scottish Government’s main priority is to explore options for protecting affected farmers and crofters in this period and maintaining levels of income support as far as possible, taking into account legislative, state aid and budgetary factors.”

We are wholly committed to doing precisely what Kate Forbes has asked us to do for her constituents.

Photo of Edward Mountain Edward Mountain Conservative

I refer members to my declaration in the register of members’ interests.

I am delighted that the cabinet secretary has come forward with some ideas in answer to our calls and the calls of industry. It is sad that it has taken so long, but I welcome that he has accepted the need for a two-year stability period. However, as he says, the clock is ticking.

In most cases, farming businesses are already working to a five to 10-year plan. Will the Scottish Government publish before the end of this year its vision for agriculture for the period following on from the two-year stability period?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The document sets out clearly our vision for agriculture, and I have done so many previous occasions. I am pleased that there is a broad welcome for the plan. It sets out a transition period lasting five years, the first two of which would, broadly, be affected by EU rules and the further three of which would give us an opportunity to provide something that every farmer to whom I have ever spoken has wished for, which is a simpler system. The paper sets out a number of ways in which, in relation to mapping, inspections and administration, that simpler system could be achieved.

To be fair to him, Commissioner Hogan has also expressed similar desires and objectives in the current CAP proposals that were considered by the Council of Ministers in Luxembourg, during a session that I attended part of.

We have published what is, as far as I am aware, the most detailed Brexit plan in the whole of the UK. I expect that, during the course of the Royal Highland Show, which many of us will be attending, I will engage with many farmers and discuss with them the proposals, and I hope that I will get their views on the consultation document over the summer months.

Photo of John Mason John Mason Scottish National Party

The cabinet secretary mentioned a number of bodies, including the agriculture champions, the national council of rural advisers and the NFUS—others would, I think, include the CAP greening group—that have done quite a lot of work on this area and have submitted comments on it already. Does he feel that a further consultation is necessary and that there is more to be gained from that?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I think that it is necessary because, looking at this analytically, there are really two periods. There is a period where we prepare for change, and then there is the period of major change after that. In my view, it is essential that the first period is long enough to have the national debate that all members recognise is necessary, to formulate the policy, and then to ensure that we are capable of delivering and administering it perfectly. That takes time. It is somewhat comical that the UK Government thinks that that can be achieved in one year. It cannot. I suspect that the UK will renege on that at some distant time. However, I do not think that there is any overlap or duplication between the various reports that have been issued. They are all intended to do different things, and I am proud that the Scottish Government has already reached out, through the national council of rural advisers and through our four agriculture champions, to set out clearly a vision of what the longer-term change will be after the end of the transition period.

Photo of Claudia Beamish Claudia Beamish Labour

I welcome the long-overdue consultation. In the section on simplification and piloting new approaches, what is there to inspire the necessary shift to a fusion of production and environmental ways of working towards agro-ecology, and what is there on support that farmers will need for that?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Many farmers are already grasping that challenge and are doing so with vigour and success. We want to continue the work to focus on the environment—for example, in carbon testing, improvement of soil quality and concentrating on effective drainage techniques that are centuries old and are fundamental to farming. The consultation paper sets out certain matters relating to the environmental schemes in pillar 2, although more work needs to be done on that because they are largely not recurrent payments; in many cases, the schemes are individual projects. I look forward to working with Claudia Beamish on developing a simpler system that meets the needs of farmers and of the environment.

Photo of Emma Harper Emma Harper Scottish National Party

I remind Parliament that I am the parliamentary liaison officer to the cabinet secretary. He has mentioned that he and his colleagues have pressed for certainty—on funding, for example. Can he provide us with examples of matters on which we do not have certainty?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

There are three or four areas on which we do not have certainty. First, we do not know what the position is in relation to pillar 2 projects that are signed for after 2019, which is less than a year away. Most of those projects are very long term. Secondly, we have no idea what the funding position will be after we fully leave the EU. Thirdly, we do not know whether the UK will deliver and implement the promise that it made that the funding that we have been receiving from Europe will be at least matched.

Finally, there is a matter that I will be pressing Mr Gove on when I meet him at the Royal Highland Show, which is that we still have no action on implementing the convergence funding pledge that he made to proceed with an independent review. I can only assume that he will, when he comes to Scotland tomorrow, announce that the delay is over, that the dithering is at an end and that the review will, as he promised last November, finally go ahead after years of delay.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I quote:

“We will incentivise methods of farming that create new habitats for wildlife, increase biodiversity, reduce flood risk, better mitigate climate change and improve air quality”.

Sadly, that is not the Scottish Government’s vision, but the vision of the Department for Environment, Food and Rural Affairs, which has been out for consultation since February. We still await the Scottish Government’s vision for what it is trying to achieve with its food and agriculture policies. How will the status quo measures that have been announced today get Scotland’s biodiversity targets back on track? We are failing to hit our biodiversity targets. We have the news that one in five British mammal—

The Deputy Presiding Officer:

Mr Ruskell, you have asked your question.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

They are facing extinction. What is the cabinet secretary—

The Deputy Presiding Officer:

You may answer the question now.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I refer Mark Ruskell to question 25 on page 22 of the consultation paper, regarding agri-environment climate scheme matters, and to the section on climate change on page 18. It seems that he has not read them.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The cabinet secretary said in his statement that the consultation

“marks the start of the process of developing a new rural support policy for Scotland.”

I said, “Hooray!” However, 18 months ago Parliament unanimously told him, through a Liberal Democrat amendment, to start the process. We have lost a year and a half. Why has it taken him so long?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I was pleased to hear the hurrah, but I expected it to be caveated, so I am not surprised that it was.

We have worked on the proposals for some time. We hoped that we would have had greater clarity by now on the big Brexit questions, including whether there will be tariffs of as much as 70 per cent on some of our food produce, whether people who come here to work from EU countries will be able to continue to do that, and whether we will be flooded by cheap meat imports from countries that do not respect our high environment and welfare standards, but no answers have been forthcoming.

We have been preparing the consultation for several months. As I said in my statement, we decided that the time for waiting for Westminster to act was over. I hope that the most detailed plan in the UK will alleviate the concerns of farmers. It is now over to the UK Government to confirm that it will provide the necessary funding to enable stability, certainty and simplicity to be guaranteed over the five years ahead.

Photo of Joan McAlpine Joan McAlpine Scottish National Party

Scottish farmers have been in the single market for all 25 years of its existence. As the cabinet secretary has outlined, without membership of the single market and the customs union, they will face tariffs and labour shortages. Does the cabinet secretary share my concern that no amount of subsidy could mitigate the damage that would be done to farmers and rural communities by a Tory hard Brexit?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

That is a very serious point with which I entirely agree. I noticed that, just this morning, the director of the Fraser of Allander institute said of the UK Government:

“With just nine months to go until the UK leaves the EU, the lack of a coherent plan from within Whitehall about the UK’s long-term economic relationship with our most important trading partner risks holding back Scotland’s recovery.”

At least the Scottish Government has today published a plan that will address some of the problems. However, it cannot address the bigger problems that Joan McAlpine mentioned relating to the freedom of movement of people, application of tariffs and withdrawal of access to the single market, which has been very important to our farmers in Scotland.

Photo of John Scott John Scott Conservative

I declare an interest as a hill farmer.

Another day, another consultation. In the real world, concerns are growing. The cabinet secretary is well aware of the concerns of the sheep industry and Quality Meat Scotland about the future viability of sheep farming in Scotland’s LFAs post-Brexit, given the massive cuts to LFASS that the cabinet secretary is proposing. Given the lack of alternatives to sheep farming in much of Scotland’s LFAs, what additional special measures does the Scottish Government consider will likely be required to keep farmers, as food producers and custodians of our landscape, in business in Scotland’s LFAs post-Brexit, as LFASS payments reduce from £65 million to £13 million in 2020?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

As I have said, I ensured that this year LFASS payments were paid at 100 per cent, after the European Parliament secured that concession from the previous proposals—the previous proposal was that payments must be at 80 per cent. We took action to deal with that.

We have announced that we will continue to pay LFASS at the maximum possible rate at which we can pay it.

I referred to page 13 of the consultation paper in responding to Kate Forbes’s question. I think that Mr Scott envisaged LFASS going down to 20 per cent in the figures that he quoted. That is not acceptable. Therefore, we want views from all concerned about alternative means of providing the necessary support. I am pleased that there seems to be consensus across the chamber that that is the correct approach.

The Deputy Presiding Officer:

If Angus MacDonald’s question is very quick, I can squeeze it in.

Photo of Angus MacDonald Angus MacDonald Scottish National Party

Has the UK Government bothered to share its draft agriculture bill? Will it contain measures that will impact on farming and food production in Scotland?

The Deputy Presiding Officer:

Mr Ewing should give a very quick answer, please.