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Scottish Government Budget 2022/23 - follow up from the Cabinet Secretary for Rural Affairs and Islands

Letter from the Cabinet Secretary for Rural Affairs and Islands, Mairi Gougeon, to the Convener, 26 January 2022

Dear Finlay,

Scottish Government’s draft Budget 2022-23

Thank you for providing the opportunity to discuss the draft 2022-23 Scottish Budget on 12 January 2022. In my evidence to the Committee I set out that this budget will provide the funding which will enable rural businesses and people to continue to build towards a sustainable future, helping them and Scotland to become fairer and greener. One of my key priorities is to support rural businesses during the pandemic and in the aftermath of the decision by the UK government to leave the EU. This investment in Scotland’s rural businesses and communities provides them with a secure foundation to create growth, prosperity and opportunity.

As part of the evidence I undertook to write to the committee on a number of points:

1. The Highlands and Islands Enterprise Agency budget
2. The Sustainable Agricultural Capital Grant scheme
3. Marine Fund Scotland
4. Funding for inshore fisheries

The Highlands and Islands Enterprise Agency budget

A number of portfolios contribute to the rural economy alongside the Rural Affairs and Islands portfolio. The Enterprise Agencies’ budget sits within Ms Forbes’ Finance and Economy portfolio, and as I outlined at committee in recognition of the Enterprise Agencies’ vital role in supporting the economic recovery, the total allocation across the three agencies in the 2022-23 Budget is the highest it has been since 2010-11.

The Scottish Government has protected HIE’s budget in recognition of its critical role in supporting economic recovery in the Highlands and Islands. Its grant-in-aid allocation for 2022-23 is £62.245m, compared to £62.445m in 2021-22. The reduction of £200,000 is a result of the phasing across years of additional capital funding provided to HIE to support the reinstatement of the Cairngorm funicular. The table below shows that HIE’s core funding has actually increased.

*Table included in Annexe A 

Based on the agency’s forecast of needs, its non-cash allocation was reduced by £3.095m which contributed to the overall decrease in HIE’s total budget of 4.88%. However non-cash budgets are used for accounting charges such as depreciation of assets. This reduction in non-cash therefore has no effect on HIE’s activities to improve business and community resilience, protect and create jobs and help deliver a fair, sustainable and green economy across its region.

The Sustainable Agricultural Capital Grant scheme (SACGS)

The Sustainable Agricultural Grant Scheme was a pilot scheme to support farmers and crofters in reducing greenhouse gas emissions. The pilot scheme was very well subscribed and was due to close in March 2021. However it was impacted by supply issues, leading to representations from individuals and suppliers around the period available for submitting claims.

Equipment affected by supply issues included electronic ear tag reading equipment, livestock weighing and handling equipment and Very Flexion tyres. Against a backdrop of high demand due to similar schemes run by the other Devolved Administrations, supply was affected for two main reasons:

• the impact of Covid on the ability of manufacturers to produce equipment (electronic components, steel shortages)
• additional delays caused by EU Exit import delays for items manufactured internationally

Officials continued to engage with a number of equipment suppliers and other UK administrations over the summer of 2021 to discuss equipment supply constraints.

To mitigate some of these supply impacts and to allow as many claims as possible to be made, the Scottish Government has extended the claims deadline twice, and also made amendments to the scheme to allow individuals to submit ‘split claims’ thus ensuring payment could be made on items as they were received.

The final date for farmers and crofters to submit their SACGS claims was 31 December 2021 so eligible claims continue to be processed. Payments totalling £10.24m have already been paid to 2,446 farmers and crofters.

Marine Fund Scotland

Marine Fund Scotland replaces the European Maritime and Fisheries Fund (EMFF) and supports the delivery of net zero, marine biodiversity and blue economy objectives. It benefits coastal communities, marine businesses and the marine environment in Scotland. The agreed priorities are:

• To support the delivery of a low carbon blue economy which contributes to our climate change targets and helps sustain and enhance the natural capital in Scotland’s seas,
• To contribute to an innovative, globally competitive, sustainable blue economy with quality jobs and fair work for its participants,
• to support fair and inclusive growth that maximises opportunities for people and communities in Scotland.

The broad support available and examples of areas MFS can support are:

• Vessel improvements – 50% support available for projects including new engines to reduce emissions, safety improvements, more selective fishing gear, improving returns.
• Aquaculture – 50% support to increase production, improve animal welfare, resource efficiency.
• Processing & Marketing – 50% support to reduce energy use, reduce waste, improve efficiency, create jobs and meet market requirement.
• Young Fishers – Support for fishers under 40 years of age for first purchase of a vessel, up to 75% assistance for vessels under £16m, and 50% assistance for vessels £16-24m. Total funding is capped at £100k under this measure to ensure affordability and focus on smaller inshore vessels.
• Public bodies & non-commercial projects may be eligible for higher grant rates up to 100% of costs where there is a public benefit.

Further details on the Marine Fund Scotland, including guidance for applicants and details of the awards that have been made to date can be found on the Scottish Government website. Links:

• Marine and fisheries Scotland: marine fund Scotland application guidance notes - gov.scot (www.gov.scot)
• Marine and fisheries grants: Grants awarded - gov.scot (www.gov.scot)

Funding for inshore fisheries

As discussed at the RAINE committee, Session 5 of Environment, Climate Change and Land Reform Committee (ECCLR) noted positive support for our network of Regional Inshore Fisheries Groups (RIFGs).

At present the RIFG network receives £200,000 per annum from the Scottish Government to support the administration of the groups and inshore related project work. The Scottish Government is in the process of considering modifications to the RIFG network to facilitate the evolution of its role, including consideration of the ECCLR recommendations.

This will ensure that the network is the main vehicle for delivering our vision for inshore fisheries management that is strong, resilient and capable of evidence based decision making.

Yours sincerely,

MAIRI GOUGEON

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