When we looked at the wider interests of rural communities in our consideration of how the new common agricultural policy would be implemented, we had, as the committee might recall, some vigorous debates in our negotiations and discussions with stakeholders. Two particular issues led to this adjustment; first, the impact of moving from the historic to area-based agricultural support payments, which is, of course, the radical change in the new policy; and, secondly, the whole debate about the pace of transition in Scotland, given that we still have historic-based payments here.
Under the current arrangements, some significant Scottish beef producers receive relatively high payments. In some cases, those payments are deserved, because of the level of activity; in other cases, however, they are made simply on the basis of a farm’s historic activities. Because of our limited ability to link the new area-based payments to activity, we had to find other ways of helping the active beef sector in Scotland.
The beef sector is very important to Scottish agriculture; indeed, it is the jewel in the crown. As our beef farmers are often the engine of Scottish agriculture, we were concerned about how in the overall package we could make available more support for beef production in Scotland. After all, this is about not just primary producers but hauliers, livestock markets, the retail sector and all the other downstream jobs.
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The backdrop of the budget is the on-going debate about how we work with the beef sector to ensure that we do not rest on our laurels and that we are constantly improving the quality of Scottish beef and other brands. Other countries are making big investments in becoming more efficient, are looking at genetics and so on.
I have used the opportunity presented by the budget to inject under the heading that you have highlighted domestic money into pillar 2 for the new beef scheme, which will be delivered over three years with an unprecedented £45 million. Of the £30.1 million, therefore, £15 million is new money that has been put into the budget for the beef scheme. I think that it will have a significant impact on the quality of beef production in Scotland and ensure that we do not rest on our laurels and that we are up there with the best.
Another part of the decision making was the debate on the transfer of funds from pillar 1 to pillar 2. As the committee will recall, it, too, was a vigorous debate, with environmental organisations suggesting that we go for the full 15 per cent transfer and put the money towards agri-environment schemes. On the other side of the fence were the producers, who had clearly looked at the impact of transition, were nervous about the financial impact on the viability of many farms in Scotland and wanted to minimise the transfer from pillar 1 to pillar 2. Ultimately, I chose to transfer 9.5 per cent rather than less than that, as some wanted, or indeed the full 15 per cent. I thought that that was a good balance.
As part of the Government’s agenda of greening the CAP and at least ensuring that some resource was available under the agri-environment schemes—after all, all our budgets are tight, what with the bigger issue of the Scottish portion of the overall European budget—I decided to put some new money into that budget, too. The figure is made up of a variety of budget inputs, some of which are simple adjustments to other headings in the level 3 figures. Even the agri-environment uplift of—if I remember correctly—£10 million does not all appear in the first year, because our announcement related to the impact over the whole programme. In any case, it takes a while for the scheme to open for applications, for applications to come in and for money to go out.
Another impact on the budget figures between 2014-15 and 2015-16 has been the financial transactions budget. As the committee will recall, the UK Government created the financial transactions arrangements, which, although they mean more money for Scotland, also require the money to be paid back to the UK Treasury in future. Under that arrangement, money was allocated to my portfolio at short notice. It was a UK Government instrument, and the money had to be allocated to different portfolios.
At the time—and despite all the vagueness about how the money might be used and all the strings that came attached from the UK Government—I asked for a budget allocation in case our fishing industry faced a particular upheaval. You might recall that at the time the prawn fleet—one of our biggest fleets—was under pressure because prawn stocks had dried up for a few months, and I wanted a safeguard in case we had to introduce emergency restructuring measures. Thankfully, the stocks came back, and the health of the prawn sector improved dramatically.
The Government was of course also pursuing other policies such as affordable housing, and as a result £22.5 million was removed from this budget line to pay for that.