Chamber and committees

Thanks very much, convener and committee members, for inviting me to address the committee today.

When I attended the pre-budget session in September, I set out the priorities of my portfolio. I am pleased to come back to outline how the 2024-25 Scottish budget, which the Deputy First Minister presented to Parliament in December, will help to deliver on those priorities within the wider context of the Government’s priorities.

The budget has been set in turbulent circumstances. At the global level, the impacts of inflation, the war in Ukraine and the after-effects of the Covid pandemic continue to create instability. In the United Kingdom, the combined effects of Brexit and disastrous Westminster policies mean that we are uniquely vulnerable to those international shocks. Those Brexit impacts continue to harm Scotland’s rural and island businesses and communities and create new challenges every year for the rural affairs, land reform and islands portfolio to respond to.

Against that background, the decisions that we have taken in this budget are driven by our values and prioritise our three missions. We have chosen a progressive path: to invest in our people, our economy and our public services. Where we can, we have taken action to prioritise support to the most vulnerable in our communities, to attract investment and support a growing, sustainable economy, and to address the nature and climate emergencies.

My priorities are clear. The budgets allocated to my portfolio will continue to make a vital difference to our rural, coastal and islands economy. As I did in the previous financial year, I will prioritise my portfolio’s direct cash injection of over £600 million into the economy for rural, agriculture, marine and island communities.

The Scottish Government is now providing the most generous package of direct support for farmers and crofters anywhere in the United Kingdom. We are also committed to getting money to people and businesses as early as we can every year, to help them to meet on-going inflationary and cost of living pressures. In 2023, the first tranche of direct payments was made in September—earlier than in the previous year—and exceeded forecasts by paying nearly £300 million in basic payments in the first three weeks. We will continue our critical work with the agricultural sector to co-develop and deliver on the agricultural vision, investing to help Scotland to become that global leader in sustainable and regenerative agriculture. We have also committed to deliver agri-environment investment as part of an overall budget of £30 million to support biodiversity.

My portfolio has expanded to include responsibility for peatland and forestry, and we are maintaining our record world-leading investment in peatland. Investment in new woodland creation planting will continue to contribute to our climate change targets and net zero ambitions.

By maintaining the £14 million for the marine fund Scotland, we acknowledge the vital role that our seas play in supporting the economy in coastal communities through fishing and aquaculture, as well as supporting activity to improve and restore the marine environment.

Our commitment to supporting the ambitions for our islands remains strong, with an investment of £6.7 million, which is an increase on the amount in the resource and capital spending review that was published in May 2022, with £4.3 million now allocated in capital.

Members of the committee have rightly taken a keen interest in the ring-fenced money due to return to the portfolio. I welcome the return of the first tranche of £15 million of that funding in the 2024-25 budget. In the draft budget, that funding is allocated as resource funding, but, across the portfolio, the greatest need is capital priorities. I am glad to have received the Deputy First Minister’s agreement in recent days that the portfolio will instead receive that £15 million as capital funding. It will fund vital unfunded capital priorities within the portfolio, which will provide important support to our rural communities, including the agri-environment climate scheme, the agricultural transformation fund, and crofting grants.

The Government will do what we can with all that we have to support our priorities in rural industries and sectors, through this and other portfolios. The biggest challenge that we face is the on-going failure of the UK Government to at least match fund pre-Brexit levels of funding from the European Union, or to provide a multi-annual funding framework that would allow us to take a longer-term view to some investments. Of course, we have no sense of what the funding future holds from the current—or any future—Westminster Government.

I know that you will want to scrutinise carefully our budget plans, but I would ask again that the committee might resolve to work with Government to support our efforts to secure the future rural funding certainty that Scotland needs and very much deserves. Thank you.

Thank you, convener, for inviting me to talk about the regulations.

The purpose of the instrument is to amend legislation relating to the marketing and production of wine and wine products. First, it will introduce rules that will regulate how products that are marketed as “ice wine” must be produced, with the rules including a definition of ice wine. Secondly, it will update the lists of approved oenological practices that can be used to produce and conserve wine and wine products that are marketed in Scotland.

The relevant existing legislation happens to be European Union retained law, which, from 1 January, will be known as assimilated law. The ice wine provision in the instrument is required because the United Kingdom is acceding to the comprehensive and progressive agreement for trans-Pacific partnership, and the provision is required for compliance with the terms of the CPTPP. Although ice wine is not produced in the UK, it is imported, and a definition of it is required to ensure that consumers can identify products that are made according to specified criteria that apply to its production.

The provision in question amends regulation EU 2019/33 to provide that products may only be marketed in Scotland as “ice wine” or similar terms if they have been produced

“exclusively from grapes naturally frozen on the vine.”

The same provision is being made across Great Britain.

Also included in the instrument are changes to approved oenological practices. Regulation EU 2019/934 authorises specified oenological practices that can be used to produce and conserve wine. The instrument amends the regulation to update those practices to reflect updates to the International Organisation of Vine and Wine’s—or OIV’s—approved methods, which largely already exist in EU law.

The UK is a member of the OIV, and its recommendations form the basis of domestic, EU and many third countries’ wine production rules. The instrument will ultimately ensure that wine producers and importers have access to the latest technological developments and wine-making practices, in line with EU law. The UK and Welsh Governments are making the same changes for England and Wales.

Before laying the instrument, the Scottish Government carried out a consultation through Citizen Space and directly contacted major stakeholders. The consultation ran from 31 August to 8 October. Although major stakeholders such as Wine GB and the Wine and Spirit Trade Association did not respond, they had previously responded to the UK Government’s consultation on the proposals, and the response to that was generally positive. There were five respondents in total to the Scottish consultation, which came from individual members of the public, and their responses advised that there would be either a positive impact or no impact from the proposed regulatory changes. The instrument was also notified to the World Trade Organization technical barriers to trade committee, but no comments were received.

I hope that my comments have been helpful in outlining what the instrument is for. I am, of course, happy to take any questions that the committee might have.

I will give a bit more detail on that. As I outlined in my opening comments, the instrument is, in essence, split into two parts. The definition of ice wine will not really have an impact on producers here, because it is not made in Scotland. It is quite a niche product that is, I think, largely produced in countries such as Canada and Germany.

From the consultation responses that we have received, it seems that there will be no impact in relation to the definition. Obviously there will be an impact on producers that use artificially frozen grapes, as they will no longer come under that definition, but, again, that will not affect our industry in Great Britain as far as I am aware. Perhaps Kevin Matheson has more to add on that.

The changes that are being proposed to oenological practices have been broadly welcomed, and there has been a positive reaction to them. They have already been implemented in the EU, where they have been seen as benefiting exporters and bottlers and encouraging innovation. Again, I do not know whether Kevin Matheson wants to add to that or whether I have adequately covered it.

To be clear, I note that the ceiling was set in 2008, but you are correct that the last time that the levies were increased was in 2010. However, the levies are set annually and I have to approve them. It is up to QMS to propose and consult on any changes to the levies.

I agree that it has been a long time, which is why it is only right that we consider the ceiling rates and why we have made the proposals for the committee’s approval. A lot has happened in that time. We are all seeing and experiencing the impact of inflation and the industry has faced some sizeable challenges over the past few years. That is why it is right that we look to increase the ceilings but also ensure that we future proof those rates so that, should QMS want to raise the levy and should levy payers ultimately agree to that after consultation, we have the ability and flexibility for it to do so.

Absolutely. You raise a really important point. It is important that we do not conflate or in any way confuse the different roles and responsibilities in relation to this. As I have said, we have the responsibility of laying the SSI in relation to setting the levy ceilings. However, it is up to QMS, if it wants to raise the levy, to have that consultation and discussion with its levy payers and to put forward those proposals to me, ultimately, for approval.

I am sure that the committee will agree that QMS plays a hugely valuable role in marketing and promoting red meat and in everything else that it does for the red meat industry. I have seen at first hand, through the different trade fairs that QMS attends, what it does in relation to exports and the value of its promotion to the red meat sector, which equates to tens of millions of pounds annually.

The strategy that QMS is consulting and engaging with its members on at the moment shows it to be driving forward sustainability for the red meat sector as well as considering a number of exciting projects. However, it is up to QMS to have that discussion with its levy payers to show exactly what it is doing on their behalf and why that role is so critical.

I am sorry, but I do not understand what you mean.

Michelle Colquhoun has the list.

The NFUS and the SAMW.

Yes, that is absolutely right. In response to both points, I would say that, if any proposal for an increase in rates were to come to me, I would expect to see evidence that QMS had consulted and engaged widely with its members and levy payers about the proposed increase and what that levy rate would be. That is the very least that I would expect.

It was to enable us to bring the instrument forward. As I said when I set out the process, it was important to bring it forward to enable time for scrutiny of the ceilings and to enable QMS to undertake the engagement work that it has to do.