Chamber and committees

I would not say that it has all gone wrong. As I said, we are still waiting for the final figures for that. Of course, I will be happy to keep the committee updated on those. We are keen to get that feedback, too. We have the funding there, and we want as high an uptake as possible and for people to be engaged. We have worked extensively on communications, contacting farmers directly to let them know about—

Those issues have been really important parts of the discussions. Somebody could tick a box to say that they have done that test but, as George said, what they do with the information that they have is really important. That is where those services will be vital.

I am happy to do that. As I said, our forecast spend on that is £2 million, so we expect that uptake to increase. I am happy to come back to the committee with further information.

It probably is not too much of a simple answer. All members of the committee will be aware of the impact—which we all see, across our constituencies—that the cost crisis is having on our communities, particularly the rural and island communities that members represent. The impact that that has had on our budget is huge. As I said in my opening statement, how we then allocate between our different priorities is an increasingly difficult challenge as our budgets become more stretched.

Let us look at the overall figures and some of what we are dealing with here. We had an increase in overall funding of £1.7 billion from the Barnett funding, but, when we look at what that means in real terms, we are actually seeing a reduction of 4.8 per cent since 2021. That means that there is huge pressure not just on my budget and what I am able to do across the rural and islands portfolio, but right across the Scottish Government.

Looking particularly at my portfolio and what that equates to, since we left the European Union, we have seen the EU replacement funding fall by 1.7 per cent over this past year since the start of 2022-23. However, that has decreased by 12.7 per cent since 2021, so obviously we do not have the spending power that we would previously have had. All of that has an impact.

As I said in my opening statement, those are the priorities that I set out to the committee in October and what we continue to provide in relation to that cash injection of £650 million, which impacts our agriculture and marine. Maintaining those payments is absolutely vital in trying to provide some of that stability too.

Thank you very much, convener. When I appeared before the committee in October, I set out the priorities for the rural affairs and islands portfolio, and I am pleased to come back today to set out how the 2023-24 Scottish budget, presented by the Deputy First Minister to Parliament in December, supports those priorities.

The budget takes place in the most turbulent economic and financial context that most people can remember. It therefore demands a response from Government that supports the most vulnerable and, ultimately, helps to build a sustainable economy. That is why we have chosen a progressive path for this budget, investing in our people, our economy and our public services. The resource and capital spending reviews set out, as best we could at the time, the spending priorities of the Government and the high-level financial parameters for portfolio envelopes. However, a lot has changed in the months since those reviews were published. We have had two fiscal events from the United Kingdom Government, which have both had a direct impact on Scotland and its economy. The autumn statement in November fell short of the interventions that Scotland needs to guide us through this cost crisis. That means that we continue to feel the impacts of the most severe economic upheaval in our generation, and we will continue to do so for some time.

Despite that, our spending reviews, our programme for government, the emergency budget review and the 2023-24 budget all show that this Government is determined to act. We are focused on eradicating child poverty, creating sustainable public services and transforming our economy to net zero. We do not view those as three competing objectives; we view them as priorities that are linked. Although it is true that the Government has not been able to do everything that we would have wanted to do at the pace that we would have wanted, we have taken action to support those priorities.

In relation to the rural affairs and islands budget, the spend of the portfolio supports some of our most fragile communities, businesses and sectors at a time when they are feeling the effects of multiple shocks: Brexit, recovering from the pandemic and, of course, dealing with the significant challenges of the cost crisis.

As I did in 2022-23, I will prioritise the direct cash injection that my portfolio makes in rural and island areas and across the agriculture and marine sectors. Some £650 million will continue to be invested across those sectors, providing much-needed economic stability. Our commitment to supporting the ambitions for our islands has been strong, with £8.5 million allocated from the portfolio for the islands programme and the carbon neutral islands project.

We are living in a global climate and nature emergency, with climate change and a loss of biodiversity among the greatest threats faced by people and our planet, so we are dedicated to our critical work with the agriculture sector to co-develop and deliver on our vision for agriculture, which includes an investment of more than £44 million over 2023-24 to help Scotland become a global leader in sustainable and regenerative agriculture. We are also delivering a new round of agri-environment support, with more than £36 million of planned investment over the coming year.

The blue economy vision for Scotland sets out the long-term outcomes that we want to see for our marine environment, our people and our economy. That work, together with the £14 million increase in Marine Scotland’s budget, is representative of this Government’s commitment to net zero and to enhancing biodiversity through the expansion of offshore renewables, climate-related research and environmental protection.

We are, of course, living in extremely difficult times, and, as we look ahead, there are still many challenges to overcome. That makes the budget and allocating funding between priorities extremely and increasingly difficult, but I am confident that the balance that the Government has achieved is the right one, and I will continue working across the Scottish Government and with our partners across Scotland to deliver for our rural, coastal and island communities.

I am happy to take any questions that the committee might have.

We have seen some of the issues that you have raised particularly in our agriculture sector, where energy, fuel and feed costs have absolutely spiralled. Against the backdrop of the turbulence that we have experienced, we have tried to provide stability. I talked about the direct cash injection of £650 million that we have been making in agriculture and marine. In the current financial year, as the committee will be aware, we made direct payments at the earliest ever stage. We commenced those payments in September. I think, from the latest figures that I have had, that we have paid more than £411 million to more than 17,000 businesses, so more than 98 per cent of businesses have received that vital cash injection.

What I have set out in the budget shows that we are trying to maintain that stability. We are giving farmers the message about what they will receive, being clear about those figures and trying to maintain them and keep them as consistent as possible. Hopefully, that will help to provide some of that certainty and stability.

I would be happy to provide that to the committee.

The £5 million budget that has been allocated for that is for the sustainable agriculture capital grant scheme. In the current financial year, we have had £5 million available for that, and it has funded slurry store covers as well as slurry spreading equipment. On the utilisation of that fund, we made over 570 offers of grant and pretty much exhausted the fund, so there has been really strong uptake of that funding. Providing that the budget is agreed, of course, we will look to launch another scheme. We will announce the details of that in due course. Of course, we will be happy to keep the committee updated.

Yes. We are undertaking a pilot on that scheme at the moment, because it is the only scheme that we have had that is means tested. Some of the feedback that I have had on the fund suggests that it has been challenging for people to apply, and we want to make sure that there is support for small farmers. We are working with the Scottish Agricultural Organisation Society—SAOS—to provide better support for small farms going forward and to utilise the funding in a way that works for them. Again, I am happy to come back to the committee with more information.

Suspending that fund for the coming year will obviously be disappointing, because it is a well-utilised fund that we run. I know of and have visited a number of businesses that have received funding from the scheme in the past. It provides the vital capital injection that many businesses need to improve their facilities.

We also know that the scheme has not been without its criticisms. One of the key criticisms that I have received about the food processing, marketing and co-operation grant scheme—we touched on this previously—is about the windows for spending the funding. In the current financial year, I announced the outcome of the round in November, and there is then a short window in which the money needs to be spent. Successful applicants have only a very short window in which to spend the funding that they have been awarded. Assessment for the scheme is also quite a long process.

We want to use the coming period to reflect on where improvements can be made to the scheme. I fully intend and hope to bring that scheme back in future years. However, we really want to use this period to reflect on it and see whether there is a way in which we can lengthen the application window to provide more time for the whole process to be run through, to consider questions about whether it is accessible enough for small businesses and to look at the criteria that we use for that fund.