European Union Farming Funding (Convergence Funds)

– in the Scottish Parliament on 31st October 2019.

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Photo of Linda Fabiani Linda Fabiani Scottish National Party

The next item of business is a statement by Fergus Ewing on allocating convergence funding to Scottish farmers and crofters. 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

Following a six-year campaign, and continued pressure by successive Scottish ministers and key farming and crofting organisations, Scotland is getting its convergence funding at last. Since I became rural economy secretary in 2016, I have pressed relentlessly for the issue to be resolved. I am therefore delighted with the long-awaited outcome.

The review that was set up under Lord Bew, with Scotland’s interests being represented by Jim Walker, made the difference. I thank Lord Bew for his diligence and for listening to Scotland’s case. Of course, I also thank Jim Walker, who was relentless, forensic and persuasive. He has played a key role in our success and we should all thank him for his work.

I also thank all members across the chamber—in this parliamentary session and the previous session— for their continued support to achieve this result. Finally, I should—and I will—acknowledge the commitment made by the Prime Minister to “right this historic wrong”. It would be churlish not to do so.

The background to this long-standing issue will be familiar to most members, but perhaps not to everyone who is listening. In 2013, as part of the most recent common agricultural policy reform, the European Union set out to redistribute direct payments more equally, based on average euros per hectare. The intention was that member states that were receiving less than 90 per cent of the EU average rate per hectare would close the gap by one third by 2019, and achieve a minimum rate of at least €196 per hectare. More important, the United Kingdom qualified for such an uplift only because Scotland’s extremely low average rate per hectare reduced the UK average per hectare rate to below the EU’s 90 per cent threshold. Without Scotland, the UK would not have qualified or received an additional €223 million—around £190 million—from the EU over a six-year period. Without Scotland, the UK would have received nothing. Despite that, the UK Government failed to return the money to Scotland, to those recipients for whom it was intended. Instead, the uplift was distributed across the UK, with Scotland receiving only just over 16 per cent, or £30 million, which was far below what was due.

At last, we can now put matters right. T he UK Treasury has confirmed that one half of the £160 million—an initial £80 million—in convergence moneys will be made available to the Scottish Government in this financial year. That was at our request, to allow farmers and crofters to be paid as quickly and as efficiently as possible. I therefore confirm that the first instalment of £80 million will be paid to active farmers and crofters by the end of March 2020. It is also my intention to allocate the remaining £80 million by the end of March 2021, and I will confirm arrangements for that once the funding is delivered by the UK Government.

I have already made clear that the convergence moneys will be ring fenced for agriculture and land management. The approach I am taking to allocating the funding is founded on two core propositions. First, I take seriously my responsibility to arrive at the fairest and best decision that is true to the principles of convergence. Secondly, this funding should most help those who need help the most—those who farm on our marginal land. Accordingly, I asked Government officials to model an approach to deliver on those two principles. Other key considerations were activity, timeliness and deliverability.

I have determined that the moneys will support active farmers and crofters who currently receive CAP basic payments. There will of course be some in the industry who have retired or whose farm businesses have changed since 2014. If we were to include them, we would have to trace them through the system, calculate what they might be due and do so for each year since 2015. That would inevitably hold up making payments to any farmer or crofter.

I consider it important to get the funds paid as quickly as possible to active farmers and crofters through a process that is simple to deliver and makes it simple for them to receive the money. We will therefore use the current CAP architecture, data and activity rules without requiring farmers and crofters to apply for the funds. We could have come up with a complex system with more targeted payments and conditions, but that would have taken much time to design. It would have required farmers to apply and be assessed, to wait to know the outcome, and ultimately wait to be paid.

Farmers and crofters in Scotland have waited long enough. My key consideration is ensuring that those farmers who need support the most receive most of the funding. I will therefore also use those funds to deliver on my commitment to do everything possible to avoid a reduction in overall funding to the less favoured areas.

The approach that I have set out ensures that the funding will go to where it was originally intended to go. The document that I have shared with members of the Scottish Parliament to support this statement sets out how that approach delivers on those core propositions and seeks to provide helpful clarity and transparency about how the funds will be deployed.

The first tranche of funding will be entirely in the form of a direct payment to active farmers and crofters and a significant proportion will be a standalone area-based income support payment comprising two elements. The first element will be based on the existing basic payment scheme regions, with an approach that respects the principles of convergence.

The second element of the single payment will ensure that my commitment to maintain funding in the less favoured areas is met. There is no doubt that the current uncertainty around Brexit and its impact on farming is taking its toll, not least on our beef sector. There are undoubtedly long-term issues to resolve in the sector to make producing beef a profitable and sustainable enterprise, but we also need to help the sector in the short term. So I will also use the convergence funding to make an additional payment under the existing voluntary coupled support schemes and I will set out more detail on how that will be achieved in due course.

I am aware that others have promoted a different approach. I want to assure members that I have considered those carefully, but I have concluded that the approach that I have chosen achieves both the intent and the purpose of convergence. There is no doubt that this one-off, lump sum payment will come at an important time—a wealth of evidence indicates that Scotland’s farmers and crofters would be worse off under every Brexit scenario. I hope that the payment will provide some mitigation of the disruption caused by the threat, and potential reality, of leaving the EU. I hope, too, that it provides Scotland’s farmers and crofters with more evidence of the Scottish Government’s willingness to do all that it can to support them through hard times.

There is more work to do. I appreciate that members may have questions about the details of the approach, which I may not be able to answer fully today—although I will do my best.

The accompanying document will help in that regard, and I am, of course, happy to update Parliament as more details become available. However, today is about marking a victory for Scottish farming and crofting—money that they are due is, at last, being repatriated. I am glad that we are getting on with getting the funding allocated as quickly as we can.

The Deputy Presiding Officer:

The cabinet secretary will now take questions on the issues that were raised in his statement, for which I will allow no more than 20 minutes. It would be helpful if those who wish to ask a question would press their request-to-speak buttons.

Photo of Peter Chapman Peter Chapman Conservative

I declare an interest as a partner in a family business and as a member of NFU Scotland. I thank the cabinet secretary for prior sight of his statement. We all celebrated the successful campaign by our Conservative MPs to repatriate the £160 million from Westminster. [

Interruption

.]

Photo of Peter Chapman Peter Chapman Conservative

It is absolutely genuine.

I also applaud the fact that the £80 million has been delivered to Scotland much earlier than expected. It is, indeed, good to get some extra money out to our hard-working farmers. However, I am deeply concerned that an announcement as to how the money is to be spent was made to the press, and not to Parliament. On Tuesday, there was no ministerial statement on the order paper, and we had to push hard for today’s statement. It is totally unacceptable to have to drag ministers to the chamber to answer questions.

More worrying still is how the cabinet secretary is planning to share out the money. My understanding is that most of the money will go to regions 2 and 3. It appears that the cabinet secretary does not realise that Orkney, Tiree and Bute—to name but three areas—are predominantly region 1 land, with 1.6 million hectares of region 1 land, two thirds of which are growing grass and supporting livestock. Has he learnt nothing about the crisis in our beef industry?

A further serious allegation surrounding the announcement is the fact that the money has been used to replace £13.1 million that was taken from the less favoured area support scheme budget.

The Deputy Presiding Officer:

Come to your question, please.

Photo of Peter Chapman Peter Chapman Conservative

That is money that the Scottish Government received, and which has now been disgracefully raided by Derek Mackay for other purposes.

The Deputy Presiding Officer:

Come to your question, please.

Photo of Peter Chapman Peter Chapman Conservative

How can Fergus Ewing possibly try to promote the idea that he is a benevolent uncle while at the same time stealing money from farmers’ pockets?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

What I have announced today is funding of the first tranche of £80 million for the farmers and crofters in Scotland, the majority of which funding will benefit those who farm marginal land. That is exactly what Lord Bew recommended, it is exactly what the money was intended to achieve in the first place, and it is exactly what we will do.

As far as the less favoured area support scheme is concerned, I made it absolutely clear that I would do everything that I possibly could to maintain LFASS income. Although I do not know whether Mr Chapman was listening at the time, I stated in Parliament that convergence funding would be used for that purpose, and I made it clear during a recent meeting with the NFUS. I have delivered on our promise.

I finish by saying to Mr Chapman that it has taken six years, since 2013, for the United Kingdom Conservative Government and its colleagues here in Scotland to be shamed into admitting that what it did—[

Interruption

.] Even now, the Conservatives do not seem to accept it; however, what the UK Government did in 2013 was a shameful injustice. It admitted that. The Prime Minister said that it was a historic injustice, and it took six years for the UK Government to be shamed into agreeing to pay that money back. By contrast, it has taken us just over six weeks to come up with a system to get that money out of the door, and to get it done. I think that Scottish farmers and crofters will notice that contrast.

Photo of Colin Smyth Colin Smyth Labour

Labour has long supported calls for the convergence funding to be fully allocated to Scotland. As such, we welcome the outcome of the review by Lord Bew, and thank all those who delivered the funding.

We also welcome the fact that the Government has now set out proposals on how to allocate the funding or, rather, part of the funding. However, I share the concerns about that being in the form of a press release at one minute past midnight on Tuesday morning, rather than to Parliament. Members have had to request today’s statement, which was given to members to read only a short time ago during portfolio question time.

As the cabinet secretary said in his statement, stakeholders such as NFUS and the Scottish Crofting Federation had a range of views on how the funding should be allocated. The one thing that united all the stakeholders and every Opposition party in this chamber was the view that the funding should not be used to plug the gap in LFASS or be siphoned off to deliver commitments that the cabinet secretary made but which he had no funds to back up. However, that is exactly what he has done and, in doing so, he has ignored the views of Scotland’s farmers and crofters.

However the cabinet secretary allocates the funding—

The Deputy Presiding Officer:

Will you come to your question, please?

Photo of Colin Smyth Colin Smyth Labour

The long-term future of farming needs to be addressed, so when does the cabinet secretary expect to set out in detail the long-term plans to properly fund agriculture, and to allocate the funds that are needed to make necessary changes in the future?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I respectfully disagree with Colin Smyth’s opening remarks. I made it absolutely clear in response to Mr Chapman that I am delivering not only what I promised, but far more and to a far greater extent, which I think is accepted. I do not accept the characterisation of the views of stakeholders that Mr Smyth presented.

On Mr Smyth’s question about long-term issues, as members know, in the motion that Parliament passed in January, as amended by Mr Rumbles, the Government was asked to set up an advisory group to advise on precisely those matters. We have done that. The group first met at the Royal Highland Show and it has met subsequently. It is doing that work and it will report, through me, to Parliament in due course.

The Deputy Presiding Officer:

Front benchers are given quite a long time to ask their questions. However, on this occasion, both have gone well over that time, which disadvantages their colleagues.

Photo of Maureen Watt Maureen Watt Scottish National Party

I congratulate the cabinet secretary on refusing to give up and succeeding and on shaming the Tories into righting that wrong. It is a windfall for farmers and crofters that many had given up on ever receiving. When they receive their payments, will there be conditions attached regarding how they are spent?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Under our approach, the first £80 million instalment will be paid to eligible farmers and crofters by the end of March next year. Officials are working hard to start making payments as soon as practically possible. There will be no conditions attached regarding what farmers can spend the money on. Farmers and crofters will be able to utilise the money not only by investing in their own farms and crofts, but, where appropriate, by reducing any debt that they have, which I know is a serious problem for some in the sector. It will make a substantial contribution to both groups.

Photo of Edward Mountain Edward Mountain Conservative

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

Before I ask my question, I must raise the issue of why the cabinet secretary thinks that releasing information to the press before giving it to Parliament is the right way to do things. [

Interruption

.]

The Deputy Presiding Officer:

Members are asking you to raise your microphone, Mr Mountain. They are obviously desperate to hear you.

Photo of Edward Mountain Edward Mountain Conservative

Sorry. You put me under so much pressure, Presiding Officer.

On convergence payments and where they went, the cabinet secretary said that that was “a scandalous act” and nothing more than a “great rural robbery”, yet he is doing that again now. He is taking £13 million out of the money that should have gone to farmers to top up the LFASS pot, which the Government raided. Would it not be fairer for the Government to pay that back to the farmers first, and then pay the rest of the money to farmers as allocated?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I completely reject that assertion. There is no evidence whatsoever to back it up. I will leave it at that.

Photo of Gail Ross Gail Ross Scottish National Party

It is absolutely laughable that the Tories are trying to claim any glory from the situation, but there we are.

Farmers in my constituency and I welcome the approach that the cabinet secretary has set out. Will he explain why he decided not to adopt the approach that was promoted by NFU Scotland?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I was pleased to meet and discuss the matter with the NFUS. There are several grounds of commonality, because both the NFUS and I felt that active farmers and crofters should benefit, that each approach has advantages and disadvantages and that the money should be paid out as quickly as possible.

However, I disagreed with the NFUS’s view that more money should be paid out to region 1 components, because I felt that more money should be paid out to region 2 and 3 components. We respectfully disagree about that.

I have already agreed to meet the chairman of the NFUS LFASS committee and his members as soon as possible. I think that those further discussions will be fruitful, because I profoundly believe that the modelling and methodology that we have based our core principles on are in accordance with the convergence principles and will benefit those whom it was intended to benefit most.

Photo of Rhoda Grant Rhoda Grant Labour

I agree with other members that the money should not be used to plug the LFASS gap. The money was given to the UK because our Scottish farmers and crofters receive less than 90 per cent of the EU average rate per hectare, and the money was intended to close that gap. Can the cabinet secretary tell me how many Scottish farmers and crofters will still receive less than 90 per cent of the EU average and how many of those to whom he is giving additional funding already receive in excess of that amount?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The table that has been provided to members shows an analysis of the average figures that apply; it is not possible to show individual figures. However, under the proposals, all farmers in Scotland will benefit. The information has been provided to members so that they have as much information as possible before them.

As far as the LFASS gap is concerned, the position was set by Europe. Members will recall that, following a consultation in 2016, it was agreed between stakeholders and ministers that, in the short term, the best option to provide stability for crofts in our constrained areas was to retain LFASS and that moving to an areas facing natural constraint scheme would result in redesignation of our constrained areas, which would have resulted in the redistribution of funding across Scotland. That was perhaps why stakeholders and ministers agreed not to proceed in that way in 2016.

Photo of John Finnie John Finnie Green

I thank the cabinet secretary for early sight of the document. This is, indeed, a victory for Scotland’s crofters and farmers, and people are to be congratulated on that, including repentant sinners. The cabinet secretary talked about the time to design a scheme, and I get that he wants that done with some speed. However, is there any latitude to revisit the situation of those who have retired since 2014?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The majority of farmers and crofters who are farming now will have been farming in 2014 and will therefore benefit over the next two years’ payments. It is fair to point out that the majority of those will benefit. Mr Finnie is right, however, to point out that some will not because they will have retired or, sadly, passed away.

However, I do not believe that the purpose of convergence money is to pay people retrospectively. I understand and sympathise with the case that Mr Finnie makes, but I do not think that it would be right to use the money for that. In addition, to have backtracked payments in that way would have required an exercise of labyrinthine complexity that could have tied up our systems for a couple of years before any payment could have been made. That is certainly not what anyone wishes. I believe that I have the support of the main stakeholders for my approach. Mr Finnie has raised a fair point that I understand, but I think that we are doing the right thing.

Photo of Emma Harper Emma Harper Scottish National Party

I welcome the cabinet secretary’s statement. The payment in question is not the only payment that the Scottish Government will provide to farmers and crofters. Can the cabinet secretary update us on what payments farmers and crofters have already received this year and how that compares to what is happening elsewhere in the UK?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Yes, I can. So far, 13,837 farmers and crofters have received their national basic payment support loan payments, which are worth more than £334 million. The loans are the single biggest mitigation action that Scotland can provide to our farmers as they face the challenges of Brexit. We were the first Administration to offer loans and to make the loan payments. Indeed, I believe that our farmers and crofters will have received their money around two months earlier than their counterparts in England.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The Liberal Democrats welcome the cabinet secretary’s statement, how he will distribute the £80 million of convergence funding this financial year and, in particular, the fact that farmers and crofters will not have to apply for the payments. Will he use the same distribution formula when the Scottish Government receives the second tranche of £80 million in 2021, or—and I think that this would be very helpful—will he take time to analyse the effectiveness of his choices for distributing the first £80 million?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Mr Rumbles makes a very important point, which I am pleased to have the opportunity to emphasise: no farmer or crofter needs to make an application. No one needs to pore over a form, worrying about how to fill it in or whether they will make mistakes. The funding will be paid using existing data and systems. That is one of the many benefits of the system—[

Interruption

.] The Tories do not like it; indeed, they do not seem to like anything at all about this, but there we are.

Mr Rumbles asked about the second tranche of funding. The second £80 million has been promised to us in the next financial year. We already have a plan to apply the same approach, to avoid a process with an application form.

We have provided the detail to members about the core principles, the basis of the methodology and the percentages that are to be applied to regions 1, 2 and 3. There are elements of the methodology that have yet to be finalised; we hope to do that next week in respect of the first payment. We intend to apply the same approach in general terms to the second payment, when it is received. I will fully update Parliament—as I always freely and happily do—in due course.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

Clearly, it is a great result for Scotland’s crofters and farmers to get these moneys, which have been withheld from them for so long by the UK Government. Does the cabinet secretary recognise that it is worth continuing to uphold the principle of recognising the needs of crofters and farmers on the least favoured land, which the Scottish Crofting Federation and others have successfully argued for?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The short answer is yes. Some 85 per cent of agricultural land is classified as less favoured, and support is vital to maintaining farming and land management in areas such as the Western Isles, which Dr Allan represents. Scotland is the only part of the UK that provides additional support to our most marginal farmers, especially those in crofting in the hills and uplands. I have supported that principle in the past, I support it in the present and I will support it in the future.

Photo of Finlay Carson Finlay Carson Conservative

Will the cabinet secretary outline his plans for the distribution of the second instalment of £80 million? When the time comes, will he once again repeat the “great rural robbery” and raid the convergence coffers—this time for £40 million for his LFASS shortfall—and again ignore the experts from the agriculture industry?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I have heard of a brass neck, but the member must have been applying the Brasso last night to remove the tarnish. That is an absurd proposition. We are paying back money—£80 million—that was wrongfully withheld for six years by the Conservatives. We will pay the second £80 million once we receive it. We will not do that before we receive it, because we try to run finances prudently. [

Interruption

.]

Photo of Roseanna Cunningham Roseanna Cunningham Scottish National Party

And who can trust the Tories? We cannot trust them.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Who can trust the Tories? The great irony—perhaps the Tories would like to listen to this—is that the Prime Minister has admitted that what took place in 2013 was a great injustice, but the Scottish Tories cannot bring themselves to admit that fact, even now.

The Deputy Presiding Officer:

If the last two questioners are fairly succinct, I will get them both in.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

The argument has always been with the UK Government, which distributed the money from Europe to farmers elsewhere in the UK. Can the cabinet secretary confirm that no farmer elsewhere in the UK who received the money when they should not have done will be disadvantaged by what is happening? Our friends and colleagues in the important agricultural industry elsewhere equally deserve our support .

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I made it clear to Lord Bew, to whom I gave evidence, that Scottish hill farmers have an affinity with hill farmers in other parts of the UK. We took a reasonable approach. That underlay our ability to persuade Lord Bew and his colleagues to benefit Scotland in the way that has emerged from the work that they did.

The money is a great boost. Contrary to the nonsense that we have heard from the Tories today, every farmer and crofter will benefit. However, it is a short-term boost, and much uncertainty remains, especially because the UK Government, having said in the Brexit referendum that it would match EU money, is now, Treasury-driven, promising to end direct payments by 2027.

The Deputy Presiding Officer:

That concludes questions on the statement. I apologise to Ms Beamish, who did not manage to get in.