Small landholdings in Scotland: legislation review

Finance (Public Funding & Banking)

Issues Raised

94. The financial situation of some small landholders is precarious. Some raised concerns about poor access to lending because they do not have the asset of land and therefore have no security for borrowing. The UK leaving the EU, and the risk of loss of direct payments, is also a major concern for some small landholders. Suggestions from consultees for improving the financial position of small landholders included:

• Re-introduction of 'Board of Agriculture-style' loans
• Access to Crofting Agricultural Grant Scheme or similar
• The provision of grants for capital projects such as buildings/drainage, reseeding and fencing

Legislation

95. Historically, legislation provided that the Board of Agriculture for Scotland could provide loans and grants to small landholders and landlords. For example, the Small Landholders (Scotland) Act 1911 constituted the Agriculture (Scotland) Fund to be used for a variety of purposes around constituting, enlarging and improving holdings. ^[70] The Land Settlement (Scotland) Act 1919 made provision for more funds to be made available for loans to be made to certain small landholders for the purchase of livestock, seeds, fertilisers and implements. ^[71]

Discussion

96. In the modern agricultural sector, payments can be made under either Pillar 1 or Pillar 2 of the Common Agricultural Policy. Local Rural Payments and Inspections Division ( RPID) offices can advise small landholders about their eligibility for Pillar 1 and for Scottish Rural Development Programme ( SRDP) grants run under Pillar 2. Non-crofters cannot access the Crofting Agricultural Grant Scheme. However, they may access a variety of others - for example the Small Farm Grant Scheme ( SFGS), ^[72] which provides targeted support for small farms that face similar issues as crofters regarding sustainability.

97. To be eligible, small landholders would need to have between 3 hectares and 30 hectares of agricultural land and also be under a set income threshold. The SFGS provides grants of between 40 and 80 percent towards infrastructure works. The Farm Advisory Service also provided under SRDP comprises a number of elements that will be helpful to the small landholding sector, including a subsidised subscription service and provision of face to face advice to crofters and small farmers.

98. When these schemes are reviewed, it will be important to continue to ensure that the small landholding sector is considered and taken into account in any changes made, so that they continue to be able to access support as appropriate.

99. The issue of land ownership, and the apparent financial issues that small landholders face as a result of not owning the land under their houses, is dealt with elsewhere in this review. However, relevant points for any review of grant schemes would require to consider take up rates of grants and advisory service provision and any constraints around borrowing faced by small landholders when compared to crofters and other areas of the agricultural sector.