Rural and island community support

The UK Government must cover the funding lost through Brexit to give farmers and crofters greater security, Rural Affairs Secretary Mairi Gougeon has said.

Writing to the Treasury ahead of the budget Ms Gougeon called for a commitment to agriculture funding – which is £620 million in 2023/24 – beyond 2025, the reversal of cuts to forestry, connectivity and peatland restoration projects and help for export businesses to deal with the additional expense when trading abroad.

Dear Steve,

Ahead of the UK Government’s Budget on 6 March, I write to put on the record the Budget outcomes that are vital for Scotland’s rural and island communities and ask for your commitment to advocate for them.

The Deputy First Minister, Shona Robison, has written to the Chancellor calling on him to prioritise investment in public services and infrastructure, which will generate increased funding for devolved governments.

Four years on from Brexit, Scotland’s, and indeed the UK’s, farmers, crofters and land managers have no funding commitment at all from the UK Government beyond 2025. The long-term nature of investment decisions and the long lead-in time for land management requires future funding certainty.

The UK Budget must fully replace EU funds in the coming year, inflation proofed, in order to minimise the disruption to rural industries and the UK Government must commit at the earliest possible opportunity to multi-year programme funding.

It is vital that we all work together to combat the challenge of climate change and maximise the potential of Scotland’s land to contribute significantly to the UK’s climate and nature restoration targets.

Contrary to the UK Government’s acceptance of the Bew Review recommendation for collective engagement, there has been limited engagement with the devolved governments on future funding and future policy development.

The UK Government must engage meaningfully on future funding allocations and fully respect the devolution settlement and the Scottish Parliament in any future arrangement.

People across rural Scotland are still paying a high price for a Brexit that Scotland did not vote for. UK trade has suffered as a result of Brexit.

The issues faced by Scottish exporters in key industries such as food and seed potatoes are well-documented. These impacts on trade are exacerbating the negative effects felt by businesses across rural Scotland resulting from high rates of inflation, high costs of borrowing and recent UK Government mismanagement of the economy.

Our export and import businesses therefore require support to deal with these headwinds.

While the full economic consequences of exiting the EU are yet to be realised, businesses now face additional expense when trading, and with further red tape to come, with more import controls pending, and checks ramping up in April and beyond.

As a direct consequence of Brexit, Scottish seafood exporters - such as those in our salmon sector - continue to face damaging barriers to trade with the EU, harming their international competitiveness.

This includes, for example, an estimated £3m per annum in Export Health Certificate costs for our salmon sector alone, and an estimated 30% increase in the cost of transporting products and a 50% increase in the cost of packaging for our seafood sector as a whole.

Our salmon and shellfish sectors also continue to face the risk of retaliatory tariffs if the UK Government fails to meet Trade and Cooperation Agreement obligations.

Brexit has also meant the end of access to important sources of funding for social and economic development across rural Scotland.

The UK Shared Prosperity Fund does not bring the same level of benefit to rural Scotland as EU membership, and I want to reiterate that this replacement for EU funding should be fully devolved, allowing funding to flow to rural, coastal and island communities in line with shared Scottish policies, designed to best serve rural Scotland’s needs.

There is also a need for greater engagement with Scottish Government officials and Ministers on the distribution of Levelling Up funding in Scotland, in order that these funds have the greatest possible impact, particularly in rural communities, which thanks to Brexit and the cost of living crisis are now starting to experience increased poverty.

Our two governments have been working together to prepare potential procurements associated with the UK Government’s Project Gigabit programme, with the first procurements expected to launch in Scotland this year.

As you will know, despite digital connectivity being an entirely reserved matter, the Scottish Government has invested significantly – with minimal investment from the UK Government to date - to deliver at least superfast broadband to every home and business in Scotland, including on our islands and in rural areas.

Scottish Ministers are pleased that the next stage of improving digital infrastructure still further, which rural and island communities and businesses need for their prosperity and cohesion, may finally be coming to fruition.

Project Gigabit has the potential to achieve this, however, the challenges of deploying infrastructure in rural and island communities can only be met with significant funding.

I am therefore asking your support for a flexible approach to funding Project Gigabit activity in Scotland, to ensure that our rural and island communities are not left behind as those in other parts of the UK benefit from improved connectivity.

Through the last Rural Development Programme 10-year period, Scotland has led the way on woodland creation, delivering over 70% of the new woodland planted across the UK.

We have made good progress in growing landowner and investor confidence in woodland creation and supported over 14,000 hectares for planting in 2023-24.

However, as a result of the loss of the 7-year EU Rural Development funding commitment and a reduced capital allocation from the UK Government, the Scottish Government has been forced to choose between building hospitals and land-based climate change measures such as tree planting and peatland restoration.

Our UK capital funding is set to fall by almost 10% in real terms between 2023-24 and 2027-28 and the Deputy First Minister has called for this to be reversed. This means that the 2024-25 forestry grants budget will be cut by 40% compared to 2023-24, so that only around 9,000 hectares of new woodland creation will be supported, despite there being over 15,000 hectares of projects already looking to plant.

Unless the reduction in capital funding from the UK Government is addressed this will result in a missed opportunity to take urgent measures to meet current and future climate change emissions reductions targets – not just at Scotland level, but also at UK level, as our tree planting counts towards UK progress on climate change targets.

This lack of continuity of funding may also cause a significant shock to Scotland and the UK’s productive forestry sector businesses and confidence, that could limit the ability to deliver woodland creation targets across the UK for many years to come. Scotland is also leading the way in peatland restoration for the UK.

With 66% of the UK’s total area of peatlands, our commitment to restoration is a critical element of the UK’s efforts to deploy nature-based solutions to mitigate and adapt to climate change and must be recognised and funded as such.

With our ambitious restoration targets (250kha by 2030), we are doing the UK’s heavy-lifting to reduce peatland emissions through year-on-year increases in restoration rates.

It is therefore unjust for the Scottish Government alone to fund peatland restoration solely from within the Scottish budget. The more we restore, the more we all benefit, and it will not just be Scotland’s climate change targets being met, but also the UK’s.

It would be appropriate for the UK Government to contribute more financially to peatland restoration in Scotland.

Put simply, Scotland should not have to fund the majority of woodland creation nor peatland restoration on behalf of all of the UK, alone.

I hope to see these issues reflected in the UK Budget and would, of course, welcome the opportunity to discuss these with you.

I am copying this letter to Laura Trott MP, Chief Secretary to the Treasury and to Mark Spencer MP, Minister of State for Food, Farming and Fisheries; Vaughan Gething MS, Minister for the Economy; Lesley Griffiths MS, Minister for Rural Affairs and North Wales and Trefnydd in the Welsh Government; and to Andrew Muir MLA, Minister for Agriculture, Environment and Rural Affairs in the Northern Ireland Executive.

Yours sincerely,

MAIRI GOUGEON